Amazon (AMZN) - Get Amazon.com, Inc. Report is "one of the internet's largest true alpha dogs," according to RBC Capital Markets analysts, who initiated coverage of the online-retail and tech giant with an outperform rating and a $4,150 price target.
Shares of the Seattle company have wavered on Friday; at last check they were off 0.6% at $3,266.
"AMZN is one of the internet's largest true alpha dogs, in our view," analyst Brad Erickson said in a research note entitled "Amazon Shrugged."
Erickson said "the company's unmatched scale and advantage in verticalized E-commerce combined with its industry-leading cloud business gives it many shots on goal for future growth opportunities in new verticals."
Amazon does not disclose how much it makes in advertising revenue, but the company's ad business is estimated to be twice as large as Snap’s (SNAP) - Get Snap, Inc. Class A Report, Twitter’s (TWTR) - Get Twitter, Inc. Report, Pinterest’s (PINS) - Get Pinterest, Inc. Class A Report and Roku’s (ROKU) - Get Roku, Inc. Class A Report combined.
"Our channel checks indicate the burgeoning advertising business in particular has a massive opportunity to drive accretive growth," the analyst said.
"Regulatory scrutiny is inevitable but carries relatively low risk to long-term equity value."
He added that "feedback from 12 ad-industry contacts was surprisingly negative on AMZN -- not because they aren't growing share but arguably because they've seemingly grown too fast."
Erickson said e-commerce broadly remains underpenetrated, with trillions of dollars of annual spending left to shift online.
Amazon has "ubiquitous brand and multiple structural advantages of the greatest inventory selection, customer loyalty and an increasingly comprehensive fulfillment strategy," he said.
"[We] think years of growth and likely share gains lay ahead, which can drive further compounding scale advantages, margin expansion, earnings growth and rising optionality into new adjacent verticals."
Erickson said Amazon could gain market share over the next three to five years in e-commerce.
"Given the emergence of restaurant and grocery delivery providers, Erickson said, "we think these types of industries, which have exploded since Covid, have ramped consumer expectations significantly around shipping times."
The investment firm believes "strongly that American consumers in particular are especially elastic to shipping times," the analyst said.