Evercore Partners Reiterates Top Rating on Amazon.com (AMZN) on Advertising and Software Opportunities

Evercore Partners analyst Ken Sena reiterated his Overweight rating, Conviction Buy and $480 price target on Amazon.com (NASDAQ: AMZN) Thursday as the firm highlights two new major opportunities for Amazon: Advertising and Software.

Sena comments, "The first has to do with its impending push into advertising, which includes a new third-party buy-side advertising platform and soon-to-be launched self-serve agency. Second, we once again revisit AWS's opportunity in providing infrastructure-bundled software, where Amazon collects 20% of billings. The sum of the report is that nowhere other than Amazon will one find as much data advantage, computational and cross-device capability, and growth that trades not much higher than brick-n-mortar peers on the basis of EV/GMV, or gross profit for that matter."

On the new buy-side ad platform, the analyst notes "A new buy-side ad platform allows for marketers to buy “Amazon audiences” through real-time bidding on third-party websites and is now plugged into all the major ad exchanges. While the solution is largely "managed" by Amazon at this point, our agency discussions indicate that a self-serve tool is imminent."

Prime Instant Video and the Kindle Lending Library have had a cannibalizing effect on Amazon’s a la carte media unit sales as these units are technically not purchased and therefore do not contribute towards unit count, according to the analyst. "While we walk through how we arrive at an estimate for its impact (~200bps), we also explore the notion of how these recent endeavors stand to support recently stepped-up efforts in content," he said. "As evidence of the progression we see, in February, AMZN began slotting pre-roll ads within the newest Amazon Studios produced series."

Lastly, Sena said the AWS pricing war detracts from bigger software opportunity. "While lower AWS Infrastructure-as-a-Service pricing is real, as evidenced by intensified efforts by Google and Microsoft, IaaS is about 5% of the broader Enterprise opportunity, lower IaaS pricing is facilitating migration to cloud, and AWS's steady IaaS lead is strengthening the moat around its infrastructure-bundled software marketplace, where AWS is collecting 20% of revenues."

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 $331.81 yesterday.

You May Also Be Interested In

• Amazon (AMZN) Bedrock Launches New Capabilities as Tens of Thousands of Customers Choose It as the Foundation to Build and Scale Secure Generative AI Applications
• UK CMA Seeks Views on Microsoft and Amazon's AI Partnerships - Bloomberg
• Compass Minerals International (CMP) PT Lowered to $15 at Deutsche Bank