By Sam Boughedda
Following a deep dive into Amazon (NASDAQ:AMZN) and the retail sector earlier this week, JPMorgan analyst Doug Anmuth released another note Wednesday, focusing on Amazon Prime's value.
The analyst, who currently has an Overweight rating and a $200 price target on the stock, told investors in the note that there have been notable enhancements to Prime over the past year, and they estimate around 270 million Prime Members at the end of 2022.
"We did another Prime deep dive & we estimate unbundling all of Prime’s components reveals a package worth ~$1,100/year, ~8x the actual $139 annual Prime cost in the US, +10% from our estimated ~$1,000 value in 2020 & double our ~$544 estimated value in 2016," said Anmuth.
In March, Amazon increased the price of its annual Prime membership for the first time since 2018 in the US, from $119 to $139.
Anmuth said they believe Amazon likely has further pricing power, and they do not expect materially elevated churn or slowing customer acquisition considering the Prime bundle’s $1,100 estimated value.
"AMZN remains our best idea, & our $200 Dec ’22 PT is based on our SOP valuing the Retail business at 1.25x our 2023E GMV of $742B & AWS at 20x our 2023E EBITDA of $52B. AMZN shares currently suggest ~19.25x AWS 2023E EBITDA & zero value for the Retail business," concluded Anmuth.