Robert W. Baird’s price target increase for Amazon.com, Inc. (NASDAQ:AMZN) is backed by a good thesis, according to Jim Cramer.
In a Mad Dash segment for CNBC, the host explained that people who have short positions in the company may hate the Robert W. Baird note increasing the firm’s price target for Amazon.com, Inc. (NASDAQ:AMZN) stock to $425 from $380 but they have to see that the firm’s thesis is sound.
According to Cramer, a lot of people are talking about what the Street is going to see once the web service division of Amazon.com, Inc. (NASDAQ:AMZN) has a breakout.
“People feel that you’re going to see the real earnings power [of Amazon once this breakout occurs] that could be down the road,” Cramer said.
However, he and his colleague did note that it is their understanding that the web retail giant also operates its web services business at a low margin so this “earnings power” is yet to be seen. Customers of the firm’s web services arm frequently say that the web giant keeps on reducing its pricing, Cramer and his colleague reveal.
Nonetheless, Cramer sticks by his comment that the upgrade has a good thesis.
“If you’re short today, you’re saying I hate this guy from Baird […] but sorry, he’s got a good thesis and the stock is going to go higher,” Cramer said.
The CNBC host added that Amazon.com, Inc. (NASDAQ:AMZN)’s upgrade makes sense in the context of what Americans do especially during harsh weather. Cramer said that people usually watch shows or movies on Netflix and shop online when they are shut in because of the weather.
William B. Gray’s Orbis Investment Management owned 484,114 Amazon.com, Inc. (NASDAQ:AMZN) shares by the end of 2014, up 38% quarter over quarter.
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