On Friday, Bernstein, a research group within SocGen, adjusted their price target on Amazon.com (NASDAQ:AMZN) shares, raising it to $235.00 from the previous $225.00. The firm maintains an Outperform rating on the stock. The adjustment comes in the wake of Amazon's latest earnings report, which revealed revenues slightly above consensus at $159 billion, marking an 11% year-over-year increase.
The report from Bernstein acknowledged that Amazon Web Services (AWS) revenue growth was slower than anticipated, especially considering more optimistic reports from peers. However, the analyst expressed confidence in an AWS revenue acceleration as the year comes to a close. The observed outperformance was attributed to a combination of factors including a 38% margin in AWS, expansion of retail margins, and a strong fourth-quarter operating income (OI) guidance, which tops out at $20 billion.
Despite AWS's year-over-year growth of 19% falling short of bullish expectations and third-party services also slightly missing the mark, the analyst's outlook remains positive. The sentiment is bolstered by the belief that AWS and Advertising revenues will pick up speed in the final quarter.
Amazon's fourth-quarter revenue guidance, projecting a growth of 7-11% year-over-year, was also noted to be marginally below Street expectations. Nevertheless, Bernstein stands by a constructive view on Amazon's fourth-quarter topline, anticipating an uptick in performance for AWS and Advertising as the year ends. The report concludes with a festive analogy, comparing the earnings insights to finding something even better than full-sized chocolate bars in a Halloween candy box.
In other recent news, Amazon's third-quarter revenue figures have surpassed market expectations, primarily driven by significant growth in its cloud services sector. The e-commerce giant recorded a revenue of $158.9 billion for the quarter ending in September, exceeding the average analyst projection.
Goldman Sachs (NYSE:GS) has also adjusted its outlook on Amazon, raising the company's price target to $240 from $230, while maintaining a buy rating on the stock. This change follows Amazon's recent earnings report, which the analyst believes reinforces a positive long-term perspective on the company's financial health and market position.
In addition to this, Amazon is bolstering its selection of everyday essentials to compete with low-cost international rivals such as Temu and Shein. This strategy has led to customers shopping more frequently and adding more low-priced items to their purchases, contributing to larger order values and increased overall spending on Amazon.
As part of recent developments, Amazon has also been working to counteract the pressure on its average selling prices and compete with low-cost rivals by boosting sales of everyday essentials. This strategy has resulted in customers shopping more frequently and adding more low-priced items to their purchases. These are the highlights from recent news items regarding Amazon's financial and business activities.
InvestingPro Insights
To complement Bernstein's analysis, InvestingPro data offers additional context on Amazon's financial performance. The company's revenue for the last twelve months as of Q2 2024 stands at an impressive $604.33 billion, with a robust revenue growth of 12.32% over the same period. This aligns with the positive outlook on Amazon's topline performance mentioned in the article.
InvestingPro Tips highlight that Amazon is trading at a low P/E ratio relative to its near-term earnings growth, with a current P/E ratio of 43.58. This could suggest potential undervaluation, especially considering the company's strong revenue growth and positive earnings projections. Analysts predict that Amazon will be profitable this year, which supports Bernstein's optimistic stance on the company's performance.
It's worth noting that Amazon's EBITDA growth for the last twelve months as of Q2 2024 was a remarkable 61.87%, indicating significant improvement in the company's operational efficiency. This substantial growth in EBITDA aligns with the expanded retail margins and strong operating income guidance mentioned in the article.
For investors seeking more comprehensive insights, InvestingPro offers additional tips and metrics to further evaluate Amazon's financial health and market position. The InvestingPro product includes 13 more tips for Amazon, providing a deeper analysis for those looking to make informed investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.