Amazon.com (AMZN) Stock May Rally Today on Higher Price Target

NEW YORK (TheStreet) -- Shares of Amazon.com  (AMZN) are down 0.23% to $383.74 in late morning trading Wednesday, despite a higher price target of $425 from $380 by analysts at RW Baird earlier today.

Baird analysts upped its price target after assigning a stand-alone value of between $40 billion to $50 billion, or $95 per share, to Amazon web services, its cloud business segment.

The firm believes legacy IT budgets will keep shifting toward cloud providers and sees visibility for Amazon web services to become a $20 billion run-rate business by 2020.

Exclusive Report: Jim Cramer's Best Stocks for 2015

Baird maintained its "outperform" rating on shares of the online retail giant.

Also, Chinese ecommerce rival Alibaba Group Holding (BABA) said it is expanding its global footprints into the U.S. as it enters the cloud computing sector with its Linux-based mobile operating system Aliyun, according to TechCrunch.

This move marks Aliyun's first venture outside China, and expects to engage about 1.4 million cloud service consumers, TechCrunch added.

Alibaba currently operates four data centers in China as well as one data center in Hong Kong. By the end of 2015, the company plans to extend its reach throughout Southeast Asia and Europe.

Separately, TheStreet Ratings team rates AMAZON.COM INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate AMAZON.COM INC (AMZN) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 1.6%. Since the same quarter one year prior, revenues rose by 14.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $6,715.00 million or 20.38% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.29%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The debt-to-equity ratio of 1.50 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, AMZN maintains a poor quick ratio of 0.74, which illustrates the inability to avoid short-term cash problems.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet & Catalog Retail industry and the overall market, AMAZON.COM INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: AMZN Ratings Report

More from Markets

IBM, Microsoft, Papa John's and UnitedHealth - 5 Things You Must Know

IBM, Microsoft, Papa John's and UnitedHealth - 5 Things You Must Know

Alcoa Warns Trump Tariffs Will Hit Profits as it Lowers Full Year Forecast

Alcoa Warns Trump Tariffs Will Hit Profits as it Lowers Full Year Forecast

Global Stocks Drift Lower as Trade War Jitters Offset Earnings Season Optimism

Global Stocks Drift Lower as Trade War Jitters Offset Earnings Season Optimism

SAP Boosts Forecasts as Cloud Sales Impress; Microsoft Earnings In Focus

SAP Boosts Forecasts as Cloud Sales Impress; Microsoft Earnings In Focus

TSMC Trims Full Year Sales Forecast as Crypto Mining, Smartphone Demand Wanes

TSMC Trims Full Year Sales Forecast as Crypto Mining, Smartphone Demand Wanes