Benchmark analyst Daniel L. Kurnos reiterated a Buy rating onAmazon IncAMZN and raised the price target from $170 to $175.
The company is poised to report its fourth-quarter fiscal 2023 results a week from this Thursday.
Despite Wall Street’s dwindling enthusiasm for Amazon the retailer, all eyes are on the impending launch of Prime Video Ads, illustrating another robust e-commerce quarter (+7% e-commerce, +15% services ex-AWS and advertising) and healthy margin expansion (+5.5% operating income).
In a break from conventional wisdom, Kurnos anticipates a different scope of the Prime Video Ads launch relative to the broader industry and its potential beneficiaries and casualties.
Furthermore, consensus estimates appear to have undervalued the integration of Prime Video Ads into financial projections.
Expectations for Amazon Web Services (AWS) appear reasonable, especially given the potential cost efficiencies of generative AI cloud, opening the door to early re-acceleration.
Thus, Kurnos remains bullish on Amazon despite the swift recovery in the share price.
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For the quarter, Kurnos’ projections align with street estimates and slightly exceed the mid-point of guidance.
Considering the consumer sentiment and expected market share gains, Amazon is likely to deliver another quarter of revenue outperformance across its retail segment, despite ongoing discounting strategies.
While the timing of AWS’s re-acceleration might raise slight concerns, the consensus outlook from the fourth quarter of fiscal 2023 to the fourth quarter of fiscal 2024 does not indicate significant impediments, barring any unexpected negative shifts.
Kurnos estimates fourth-quarter fiscal 2023 revenue and EPS of $165.49 billion (vs. the consensus of $165.90 billion) and $1.27 (vs. the consensus of $1.30).
Price Action: AMZN shares are down 0.32% at $152.84 on the last check Monday.
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