Amazon shares opened higher Monday, following news that Citigroup analysts have raised their 12-month price target for the stock. The investment bank estimates the tech giant’s Prime membership could reach some 80% of the US population in a little over ten years from now.
Amazon shares opened 0.74% higher at $1,966.55. The stock ended in the green Friday, too.
Amazon’s new price target
Citi analyst Mark May, has raised his 12-month Amazon price target to $2,250 from $2,100, previously. That’s around 15% increase from the current stock price.
That takes Citi’s target on Jeff Bezos’ tech and ecommerce behemoth, above the recent price target increase from MKM Partners on the Amazon share price, to $2,215 from $1,840.
“We remain positive on Amazon shares and view Amazon's large and growing global Prime member base as not only a source of recurring revenue but a key reason why brands and third-party sellers are increasingly relying on Amazon's marketplace,” May wrote in a note to clients, Sunday, according to CNBC.
Citi’s May went on to say that the performance of Prime had been “tremendous”, with membership of the service growing 35-40% per year.
“There are many benefits of having highly satisfied membership-based customers, but a simple metric is that most studies suggest Prime members spend twice as much as non-Prime members,” May said.
More upside seen for Prime membership growth
Citi’s May was upbeat on the potential for growth of Prime membership levels.
He said in his note that he anticipates Prime membership hitting 275 million by 2029, with an increasing percentage of US households buying into the scheme.
May added that there’s also still the possibility that international Prime members could begin to further increase their spending. In the US, the average spend per Prime member, per month, is around $120, some three times the $35-$40 per months spent by their European counterparts.