Even for a company as large as Amazon.com Inc., a double-digit percentage gain in 2019 is nothing to a bull expecting the stock to almost double over the next two years.
According to Jefferies' Brent Thill, Amazon remains undervalued and "many of its embedded growth opportunities are underappreciated."
The firm now models a road map for the stock to trade hands upward of $3,000 a share by 2021. Amazon shares rose as much as 0.8 percent to $1,828 a share on Wednesday, the highest intraday since Oct. 18.
A sum-of-the-parts breakdown by Jefferies forecasts upside of approximately 65 percent as profitable segments — such as Amazon Web Services, Advertising, and 3P Seller Services — are all growing at rates faster than the core retail division. "Multiples for these high-recurring revenue, high-margin businesses to expand as investors recognize their embedded value," Thill said in a research note to clients.
Thill also mentions the forecast does not include any upside from new businesses like health care, "which could prove a break-out hit" with Amazon expected to play a meaningful hand in medical prescriptions and over-the-counter drugs.
Amazon shares have climbed about 35 percent since a bottom in late December, but Jefferies still believes the stock has held back since last earnings given "investor concerns about decelerating top line growth and step up in investments." The firm reiterated its buy rating and 12-month $2,300 price target.