Amazon Could Be A $1,300 Stock Within Three Years

• Shares of Amazon.com, Inc. (NASDAQ: AMZN) gained more than 110 percent throughout 2015.
• Rob Sanderson of MKM Partners initiated coverage of Amazon with a Buy rating and $800 price target.
• Sanderson added the stock could grow into a $1,300 stock over a three to four-year timeframe.

Shares of Amazon more than doubled throughout 2015 and have gained nearly 300 percent over the past five-years. Investors thinking that the stock is set to lose momentum may be mistaken, at least according to Rob Sanderson of MKM Partners.

In a report published Tuesday, Sanderson initiated coverage of Amazon with a Buy rating and $800 price target that will grow into a $1,300 stock within three to four years.

According to Sanderson, Amazon is the "dominant player" within two of the "largest secular growth opportunities" which are: 1) global e-commerce, and 2) cloud computing.

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Sanderson explained that Amazon's continued investments in its e-commerce segment "mask the earnings power potential" but the business is "structurally more efficient" and should deliver long-term margins that are better than traditional retails. On the other hand, Amazon's cloud business has "broken out from a margin perspective" given its 1,660 basis points year-over-year gain while the topline growth accelerated 78 percent last quarter.

"We consider Amazon a core holding for growth investors," Sanderson argued.

Bottom line, Amazon's management team "built remarkable trust" among investors and the investment community "clearly believes" in the longer-term opportunity. Looking forward to the long term, the analyst sees Amazon's net profit surging to $20 billion which justifies the longer-term $1,300 price target.

Shares were up more than 1.7 percent at $669.27 on Tuesday morning.