Amazon upgraded on Kindle demand
The e-book leader will likely add a color screen to its Kindle to make it the device to beat, analyst says.
By Scott Moritz, TheStreet
After a 10% slide in the stock in the past month, Collins Stewart analyst Sandeep Aggarwal upgraded the stock to buy, citing the Kindle's strength in the all-important e-book sector. Aggarwal estimates that Amazon will sell 3.85 million Kindles this year. If that turns out to be true, Amazon would have a profit of $650 million on $2.5 billion in sales.
The electronic reader sector is starting to heat up. Last month, Apple (AAPL) introduced its iPad tablet. Last week, Google (GOOG) was rumored to be entering the race with a "gPad"-friendly operating system and this week, Barnes & Noble (BKS) has stocked up on its Nook e-reader devices.
Amazon bulls say Kindle's dominance among e-books, while challenged by upstarts, will likely continue as the category takes off with consumers.
Call it an iTunes-like effect. Aggarwal says most of the $649 spent by the average Kindle user a year will come from digital books, media subscriptions and accessories. "Kindle revenue is not limited to unit shipment," Aggarwal says. Amazon will sell about $400 in products beyond the $259 Kindle price, Aggarwal estimates.
It also won't hurt that the Kindle is likely to be upgraded with a color screen soon, says Aggarwal, noting that the device represents up to 8% of total Amazon sales.
Last week, the New York Times reported that Amazon purchased touch screen specialist Touchco, a move that presumably puts Kindle on track for more advanced display technology.
Amazon shares have climbed 79% in the past year, doubling the Nasdaq’s 35% advance.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Traders might want to bite on BABA, but long-term investors have reasons to wait.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.