Piper Jaffray Sees Amazon's (AMZN) Advertising Profits Exceeding AWS by 2021

Piper Jaffray analyst, Michael Olson, reiterated his Overweight rating on shares of Amazon.com (NASDAQ: AMZN) and reiterated a price target to $2,100 noting that Amazon's advertising business has been quietly growing into a massive driver of current and future profitability.

The analyst stated "In 2018, we estimate Amazon advertising revenue will be ~$8B, potentially contributing >$3B to operating profit. By 2020, we expect Amazon ad revenue of $16B and by 2021, beyond the scope of our current model, we believe it is highly likely that profits contributed from advertising will exceed those from AWS. Applying an advertising comp multiple of ~16x to estimated 2020 Amazon advertising operating income suggests an ad business that should be valued at $150-190B".

For an analyst ratings summary and ratings history on Amazon.com click here. For more ratings news on Amazon.com click here.

Shares of Amazon.com closed at $1887.70 yesterday.

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