Pivotal starts on Amazon bullishly citing growth opportunities and ‘unmatched scale’

Amazon (NASDAQ:AMZN) was initiated with a “buy” rating at Pivotal Research on Friday. The equity ratings firm said the company has sizeable revenue growth opportunities from AWS, massive infrastructure advantage to expand e-commerce share, and by enhancing existing subscription services, especially internationally.

“Amazon has a deep moat around their core businesses driven by their unmatched scale and has what appears to be the largest organic revenue growth opportunity of any mega-cap tech company,” Pivotal said in their October 11 report.

Pivotal sees opportunities for Amazon to expand operating margins with high margin cloud computing or advertising, utilizing new AI/robotic/self-driving technologies, and internal chip development, among other things.

Over the next 5 years, Pivotal expects the company to generate +12% revenue CAGR, driven by ~30% AWS, ~20% operating cash flow CAGR, ~30% free cash flow per share CAGR, and similar EPS growth.

AMZN has a PT of $260, implying an upside of 39%. Stock is up 23% so far this year while the S&P 500 is up 21%.