BofA Securities analyst Justin Post recently reiterated his positive outlook on Amazon.com Inc (NASDAQ: AMZN), maintaining a Buy rating on the stock with a price target of $204. Post’s analysis anticipates that Amazon’s first-quarter earnings will reflect encouraging trends, with a revenue projection of $143 billion, closely aligned with market expectations.
The spotlight of scrutiny lies on potential upside drivers from Amazon Web Services (AWS) and advertising, as well as the prospect of outperformance in the retail segment. Post forecasts AWS to experience a quarter-over-quarter growth of $545 million, accompanied by a 16% year-over-year increase, slightly exceeding the market’s 15% expectation. Projections suggest an operating profit of $11.5 billion, with cautious attention on a potential $12 billion forecast by other analysts.
Looking forward to the second quarter, Post has revised revenue expectations upward by $1.5 billion to $149.9 billion, factoring in recent U.S. dollar depreciation and potential shifts in demand due to seasonal sales events. Despite these adjustments, Post maintains a bullish sentiment on Amazon’s eCommerce growth trajectory, supported by data indicating a slight acceleration in U.S. online spending.
Post highlights the forthcoming Worldwide Developer Conference (WWDC) and the rollout of new AI software features as potential catalysts for growth, likely to bolster Amazon’s stock performance amidst broader aspirations for multiple expansions in 2024. He also underscores strategic initiatives like Amazon’s Big Spring Sale and the integration of Prime Video ads as drivers of revenue growth.
Moreover, Post emphasizes Amazon’s strategic shifts and operational efficiencies as key drivers of margin expansion and potential stock appreciation. Despite observing a year-to-date increase in the forward price-to-sales (P/S) multiple, Amazon’s valuation remains below its ten-year average, suggesting room for further multiple expansion.
In terms of price action, AMZN shares traded higher by 0.82% at $176.04 at the last check on Monday.
It’s important to note that this content was generated with the assistance of AI tools and underwent review and publication by Benzinga editors.
