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Amazon shares target raised by TD Cowen on strong growth outlook

EditorEmilio Ghigini
Published 07/10/2024, 08:25 AM
© Reuters.

On Wednesday, TD Cowen affirmed its confidence in Amazon.com Inc. (NASDAQ: NASDAQ:AMZN) shares, increasing the e-commerce giant's price target to $245 from $225, while maintaining a Buy rating.

The firm anticipates a robust performance in the second quarter of 2024, with projected revenues of $150.2 billion, marking an 11.8% year-over-year increase. This forecast aligns with the consensus and is attributed to significant growth in Amazon Web Services (AWS) and advertising revenues, which are expected to rise by 16.6% and 22.0% year-over-year, respectively.

The analyst at TD Cowen also forecasts a substantial jump in operating income for Amazon, predicting a 98% year-over-year increase to $15.2 billion for the second quarter, which stands 20% above the consensus. The projection is based on escalating gross profits, operational expenditure efficiencies, and an advantage gained from the extension of server lifespans.

Adjustments to Amazon's financial model, including changes to the discount rate and capital expenditure (CAPEX) assumptions, were made. These tweaks contributed to the firm's decision to raise the price target for Amazon's shares.

The revised price target reflects a bullish outlook on Amazon's financial health and market performance. With the company's diverse revenue streams from AWS and advertising, along with operational improvements, the firm's analysis suggests a strong growth trajectory for Amazon in the near term.

In other recent news, Amazon's founder, Jeff Bezos, plans to sell approximately $5 billion worth of his shares in the company. This news comes after Amazon reported strong first-quarter earnings, buoyed by advancements in artificial intelligence.

Meanwhile, Mizuho Securities maintains its Outperform rating on Amazon stock, following a comprehensive survey of Amazon Web Services customers that revealed several positive trends in the cloud computing segment.

In other developments, Talen Energy has formally requested the Federal Energy Regulatory Commission dismiss objections to its interconnection agreement with Amazon for a data center project.

The second-quarter corporate earnings season is set to begin, with analysts predicting a 10.1% increase in S&P 500 companies' earnings per share. The upcoming earnings season is anticipated to be crucial in determining the profit growth of various companies, aligning with the performance of tech giants.

These developments highlight the recent activity and prospects of these companies, providing investors with a clear picture of their current status and future potential. As always, it's essential to consider these facts when making investment decisions.

InvestingPro Insights

As Amazon.com Inc. (NASDAQ:AMZN) navigates through a dynamic retail and cloud services landscape, the latest data from InvestingPro provides a snapshot of the company's financial posture. With a market capitalization of a staggering $2.07 trillion, Amazon stands as a testament to its colossal presence in the industry. The company's P/E ratio, a measure of its earnings relative to its share price, currently stands at 55.93, pointing to high investor expectations for future earnings growth. This is further underscored by a robust revenue growth of 12.54% over the last twelve months as of Q1 2024, demonstrating Amazon's ability to expand its top-line amidst competitive pressures.

InvestingPro Tips highlight Amazon's role as a prominent player in the Broadline Retail industry, with its cash flows more than capable of covering interest payments, indicating a healthy financial structure. Furthermore, with analysts predicting profitability for the current year and a significant price uptick over the last six months, Amazon's stock appears to be on a positive trajectory. It's worth noting that the company is trading near its 52-week high, reflecting investor confidence in its market position and future prospects.

For those looking to delve deeper into Amazon's financial analysis, InvestingPro offers additional tips that could provide valuable insights. With an InvestingPro subscription, users can access a broader range of metrics and expert opinions. Remember to use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 13 additional InvestingPro Tips available that could help investors make more informed decisions regarding Amazon's stock.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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