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Amazon set for 'record-breaking' holiday season with nearly half of online sales: Analyst

  • Almost half of all online shopping will be on Amazon.com this holiday season, according to analysis from SunTrust.
  • "Given a record breaking Prime Day in 2Q, continued momentum in 3Q, and the fact that this is just the second holiday season offering monthly Prime memberships, we expect a record-breaking holiday season for the company," wrote analyst Youssef Squali on Wednesday.
Jeff Bezos
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Jeff Bezos

Almost half of all online shopping will be on Amazon.com this holiday season, cementing Jeff Bezos's commercial grip over one of the most important seasons, according to one analyst.

SunTrust Robinson Humphrey said Amazon's ever-broadening product selection and the popular shift toward online shopping will lead to big profit for the e-commerce giant. In a note to clients, analyst Youssef Squali argued that the current Adobe projections for online sales are too low.

"Adobe is projecting online holiday shopping sales to hit $107.4 billion in the U.S.," wrote Squali in a note to clients. "Given a record breaking Prime Day in 2Q, continued momentum in 3Q, and the fact that this is just the second holiday season offering monthly Prime memberships, we expect a record-breaking holiday season for the company."

Amazon shares fell 0.8 percent in midday Wednesday after the report. Its shares are up 50 percent year to date through Tuesday versus the S&P 500's 15 percent gain.

The analyst has a buy rating on Amazon as well as a price target of $1,270, which is 12 percent above its current price.

Suntrust isn't the only analyst bullish on Amazon. In similar fashion, Morgan Stanley outlined a case for the company to reach a $1 trillion valuation.

Morgan Stanley reiterated its overweight call on Amazon shares, presenting a potential "bull case" with a 12-month price target of $2,000 per share, or roughly a $1 trillion market cap.

"Amazon's high margin [revenue] disclosure speaks to the $1trln ($2,000/sh) sum of parts bull case," Morgan Stanley analyst Brian Nowak wrote in a note to clients Sunday.

While Amazon's ascent to retail monarchy has been the product of years of logistical tailoring, SunTrust's Squali argues that there are multiple reasons why Adobe's Digital Insights numbers may be too low.

Adobe's Model Underestimates Historically


"Adobe's model has historically projected growth rates below actual growth rates," wrote Squali. "Last year, Adobe projected 10 percent year over year vs. 14 percent year over year actual, and in 2015 the projection of 11 percent year over year was well short of the actual 18 percent year over year."

Source: SunTrust Robinson Humphrey, Adobe 2017 Holiday Report

The "Ferocity" of Change in Retail Isn't Appreciated

"Commentary by Adobe's Tamara Gaffney also suggests that all of the predictive models struggle with factoring in the unprecedented competitive retail environment (6,691 store closure announcements year to date)."

Source: SunTrust Robinson Humphrey, Adobe 2017 Holiday Report

"Mobile (smartphone + tablet) visits will surpass desktop visits for the first time this holiday season, according to Adobe, and one notable trend within mobile is more 'boutique-like' interfaces will lead to better conversions."