Pivotal Research analyst Michael Levine raised the firm's price target on Amazon.com (AMZN) to $4,500 from $3,925 and keeps a Buy rating on the shares. The stock closed Wednesday up $3.85 to $3,148.73.

Investors and analysts have been framing the Amazon sum-of-the-parts valuation wrong, Levine tells investors in a research note. Amazon advertising is only 5% of revenues, but is a "far greater contributor" to overall non-Amazon Web Services EBIT margins than the Street recognizes, says the analyst.

Levine believes that if advertising was viewed as a standalone business unit, it would represent "well north" of 300% of 2020E non-AWS EBIT. Based on his view that there is "massive upside" to estimates by fiscal year 2024, the analyst increased the firm's target to a Street high of $4,500. Levine thinks investors are "materially underestimating" the earnings power of the ad business. He calls Amazon the "best mega-cap on a multi-year basis."