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JPMorgan: Amazon Stock to Hit $1,110 as E-commerce Dominance Increases

Image: JPMorgan: Amazon Stock to Hit $1,110 as E-commerce Dominance Increases
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By    |   Thursday, 18 May 2017 03:48 PM

JPMorgan urged savvy investors to make the prime decision to buy Amazon.com Inc. stock now before the price skyrockets because the Seattle online giant’s share of the U.S. e-commerce market will rise significantly in the next two years.

"We believe Amazon is well positioned as the market leader in e-commerce, where it's still early days with U.S. e-commerce representing ~12% of adjusted retail sales (ex-gas, food, and autos)," analyst Doug Anmuth wrote in a note to clients.

"We believe Amazon continues to show strong ability to take share of overall e-commerce, and its flexibility in pushing first-party vs. third-party inventory and its Prime offering both serve as major advantages," CNBC cited Anmuth as writing.

He reaffirmed his $1,110 December 2017 price target for Amazon stock, which was trading late Thursday at $958.91.

To be sure, investors who think Amazon is about to destroy the retail industry as we know it have figured out a way to supercharge that bet -- by buying the online giant’s stock and pairing it with a short position in the SPDR S&P Retail ETF, symbol XRT, a foundering fund that primarily holds bricks-and-mortar stores, Bloomberg reported.

“If you are long Amazon, wouldn’t it make sense to be short the stocks Amazon will look to decimate?” said Ihor Dusaniwsky, head of research for S3 Partners LLC. “It’s going long the ‘best of the breed’ and shorting the ‘worst of the breed.’”

Traders are building up short positions in anticipation of XRT dropping to $40 or $41, Dusaniwsky told Bloomberg. The fund, which is down more than 5 percent this year, closed at $41.74 on Tuesday. XRT’s top holdings include furniture stores, supermarkets and groceries, electronics chains and media streaming, all areas where Amazon is spending heavily, Dusaniwsky said.

“If Amazon succeeds, it will be at the expense of companies like Wayfair, Sprouts Farmers Market, Whole Foods, Best Buy and Netflix,” Dusaniwsky said. These five companies make up around 7 percent of XRT, which also holds $3.37 million of Amazon stock, making it 1.2 percent to the portfolio, according to data compiled by Bloomberg.

(Newsmax wire services and Reuters and Bloomberg contributed to this report). 

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JPMorgan urged savvy investors to make the prime decision to buy Amazon.com Inc. stock now before the price skyrockets because the Seattle online giant's share of the U.S. e-commerce market will rise significantly in the next two years.
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2017-48-18
Thursday, 18 May 2017 03:48 PM
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