Amazon’s revenue should get a boost thanks to its Alexa voice-activated devices.
That’s according to RBC Capital Markets, which, according to CNBC, reaffirmed its outperform rating on the eCommerce leader. RBC is bullish on Alexa’s prospects to add to Amazon’s financial results, following a recent survey of Alexa products.
“Following our third annual Alexa survey, we are more impressed with the traction of these devices and more convinced of their potential L-T term impact,” analyst Mark Mahaney wrote in a note to clients on Wednesday (Dec. 20). “With tens of millions of users and 20,000+ skills, we see Alexa’s value prop as becoming increasingly powerful, as awareness an ownership ramp.” The RBC analyst has a $1,200 price target on Amazon’s stock, which would make a 2 percent increase from where the stock closed on Wednesday.
Based on the survey, RBC said that awareness about Amazon and its voice recognition assistant Alexa has jumped to 89 percent over the past nine months from 77 percent. What’s more, 15 percent of survey respondents said they owned an Alexa-enabled smart speaker, which is a two percentage point increase from the past survey. As a result of a growing awareness for Alexa products, the analyst said Amazon will earn an additional $10 billion to $11 billion in Alexa-related retail sales in 2020.
“The win, by the way, for Amazon probably is not just selling devices … 40 percent of people who own these [Alexa] devices shop more with Amazon,” Mahaney said in a subsequent interview with CNBC. “You are removing friction; you’re creating more opportunities for Amazon to be there with its shopping cart.”
In his note on Wednesday, the analyst said Amazon has one of the best management teams on the internet and that “we are positive on management, given their consistency, operational and strategic track record, focus on innovation and customer service and long-term shareholder orientation.”