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Amazon shares rise as Morgan Stanley raises price target

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Amazon shares are higher Wednesday, after analysts at Investment Bank Morgan Stanley raised their price target on the tech giant. The bank is now the most bullish on the global etailer on Wall Street, as it lifts its valuation of Jeff Bezos’ business to $1.2 trillion.

By 1525 BST Amazon shares were 1.56% higher at $1,963.00. The stock has been climbing steadily in recent weeks trading activity.

Amazon’s new price target                                             

Earlier Wednesday, Morgan Stanley alerted its clients to a price target upgrade. The Investment Bank now expects Amazon shares to rise to $2,500 over the coming 12 months, up from its previous price target of $1,850.

That new target gives the global behemoth a total valuation of over $1 trillion. Reports also state that this new price target makes Morgan Stanley the most bullish on the stock.

“We have increasing confidence that Amazon's rapidly growing, increasingly large, high margin revenue streams (advertising, AWS, subscriptions) will drive higher profitability and continued upward estimate revisions,” said Morgan Stanley analyst Brian Nowak in a research note to clients.

“The (price target) adjustment reflects Amazon's improving business mix, long-term potential earnings power than its previous three-part sum-of-the-parts price target calculation,” Nowak wrote.

As well as reiterating an ‘overweight’ rating on the stock, Nowak also updated his ‘bull case’ for the Amazon stock. The Morgan Stanley analysts said there is the potential for the share price to hit $3,150.

Nowak states this could be achieved in a scenario of 25% compound annual growth rate for subscription revenue through 2022, plus 33% for the AWS cloud business and 37% for ‘other’ revenue – mainly advertising.

Amazon working on increasing streaming content?

Separately, a Bloomberg report suggests Amazon is in talks with Sony and Paramount to increase its streaming rights for Amazon Prime TV subscribers.

If successful, the talks could lead to new content from Sony’s Viacom studio and additional films from Paramount, for the Amazon streaming service.

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