Amazon Analyst Says This 'Strategic Asset' Could Bring $15B In Revenue

E-commerce giant Amazon.com, Inc. (NASDAQ: AMZN) spent $39 billion in retail capital expenditures over the last six years — $60 billion including capital leases — to create significant fulfillment infrastructure and delivery capabilities, according to BofA Securities.

The Amazon Analyst

Justin Post maintained a Buy rating on Amazon with a $2,480 price target.

The Amazon Thesis

Amazon's multibillion-dollar investment helped it deliver 2.3 billion of its own packages in 2019, which would make it the fourth-largest delivery company in the U.S., Post said in a Monday note. (See his track record here.)

Across the world, Amazon delivered 3.5 billion packages, or half of its own orders, the analyst said. This figure should rise as Amazon continues to reduce its reliance on outside delivery platforms, he said.

Amazon can leverage its "strategic asset" to eventually offer a delivery service to even non-Amazon sellers, Post said. This creates a new opportunity for Amazon where it can capture a 15% market share of the 19.5 billion packages that are expected to be shipped in 2025, the analyst said.

Amazon could see an incremental $15 billion in services revenue in five years, and this could represent a market value of $75 billion to $171 billion in the U.S., he said.

On the global stage, Amazon's market value of shipping products could be worth $100 billion to $230 billion, Post said. 

"Retail, cloud & advertising are still top reasons to own AMZN, but we see expanding delivery capabilities as a strategic asset for the retail business and a material opportunity to rollout another high-margin service leveraging existing capability."

AMZN Price Action

Amazon shares closed at $2,393.91 on Monday.

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Photo courtesy of Amazon.