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Amazon Business Is A $245B Opportunity, According To Bank Of America

Wayne Duggan

Amazon.com, Inc. (NASDAQ: AMZN) is off to another hot start to 2019, and one analyst said Tuesday Amazon Business is a long-term growth driver that's really starting to pick up steam.

The Analyst

Bank of America analyst Justin Post reiterated his Buy rating and $2,100 price target for Amazon.

The Thesis

As Amazon’s e-commerce business matures, the company’s next major shot in the arm could come from business-to-business sales.

Amazon Business was launched as Amazon Supply back in 2012. In the past two years alone, Amazon Business’ gross merchandise volume (GMV) run rate has grown from $1 billion to $10 billion, according to Post. He said momentum should continue throughout the next decade.

“Globally, the 2021 B2B eCommerce TAM is estimated at $6.7tn and, excluding the Chinese B2B market at an estimated 60% of total, we project a ‘21 international B2B online TAM of $2.1tn,” Post wrote in a note.

Post said margins may be a challenge, but the potential impact of Amazon expanding its Business reach could have a huge impact on the stock’s long-term valuation.

Post estimates Amazon Business GMV will more than triple from here to $34 billion by 2023. Amazon Business already has more than one million customers. But if Amazon gains just 5 percent international market share and 10 percent U.S. market share, Post estimates Amazon Business could contribute an additional $125 billion to $245 billion in value over time.

Price Action

Amazon's stock traded higher by 2 percent to $1,777 per share at time of publication.

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Latest Ratings for AMZN

Date Firm Action From To
Mar 2019 KeyBanc Upgrades Sector Weight Overweight
Feb 2019 Pivotal Research Initiates Coverage On Buy
Feb 2019 Raymond James Maintains Outperform Outperform

View More Analyst Ratings for AMZN
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