On Tuesday, Stifel, a financial services firm, adjusted its stock price target for Amazon.com (NASDAQ:AMZN), increasing it to $224 from the previous $200 while maintaining a Buy rating on the stock. The revision comes amid a mixed sentiment in the tech sector since the beginning of the year, with larger companies generally seeing more positive sentiment.
The analyst noted significant shifts in Sentiment Score among various companies, highlighting the largest declines and increases since the beginning of 2024. Notably, companies like SNAP, DV, IAS, and PERI saw considerable drops in their Sentiment Score rankings, while CART, CRTO, and TTD experienced substantial gains.
The analyst elaborated that options market activity suggests expectations of more subdued reactions to earnings reports compared to historical trends. This observation is attributed to the belief that the underlying fundamentals have not significantly changed from projections made three months prior. The market's understanding of the improving backdrop is also said to be well absorbed by investors.
The new price target for Amazon is based on an 18 times multiple of the firm's next twelve months (NTM) Adjusted EBITDA, which is an increase from the prior multiple of 16 times. This adjustment reflects an expectation that Amazon's shares will continue trending towards the higher end of its valuation range, which has peaked at around 20.5 times over the past two years.
InvestingPro Insights
Recent data from InvestingPro underscores Amazon's (NASDAQ:AMZN) robust financial performance and market positioning. With a staggering market capitalization of $1.91 trillion and a revenue growth of 11.83% over the last twelve months as of Q1 2023, Amazon's scale and expansion continue to impress.
Despite trading at a high earnings multiple of 62.38, the company's substantial revenue of $574.78 billion and a gross profit margin nearing 47% reflect its operational efficiency. Analysts remain optimistic, as evidenced by the InvestingPro Tips, which highlight Amazon as a prominent player in the Broadline Retail industry with a high return over the last year and predictions of profitability for this year.
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