On Thursday, Bernstein SocGen Group maintained a positive outlook on Amazon.com (NASDAQ:AMZN), reiterating its Outperform rating. The firm highlighted Amazon's strong performance in the third quarter, with revenue reaching $620.13 billion and operating income surpassing expectations and previous guidance. The company's stock is currently trading near its 52-week high of $231.20, having delivered an impressive 56% return over the past year.
According to InvestingPro analysis, Amazon maintains a "GREAT" overall financial health score. Additionally, North America operating income (OI) margins saw a year-over-year increase of 100 basis points and a sequential rise of 30 basis points, reaching 5.9%. International retail margins hit their highest level since the first quarter of 2021, at 3.6%.
With an EBITDA of $111.58 billion and a robust gross profit margin of 48.41%, Amazon continues to demonstrate strong operational efficiency. InvestingPro subscribers can access 17 additional key insights about Amazon's financial performance and market position.
The analyst expressed confidence in Amazon's long-term fundamentals, citing several growth drivers. These include the acceleration of Amazon Web Services (AWS) with AI, which is expected to maintain margins in the 30s, and the ramp-up of Prime Video contributing to the acceleration of high-margin digital ads. The company is also anticipated to enhance the growth of Sponsored Product ads by optimizing ad relevancy.
Despite a guidance for the top line that was slightly lower than anticipated, Bernstein does not foresee the shorter holiday season as a significant obstacle for Amazon. The firm's assessment is based on Amazon's ability to offer consumers fast and reliable delivery, a variety of promotional events, and a broad selection of products. The analyst expects Amazon's retail margins to continue benefiting from improvements in their inbound inventory network, an increase in the number of units per delivery box, and the expanded use of robotics in fulfillment centers, which are projected to reduce costs.
The analyst's outlook for Amazon remains robust, with an expectation for the company to sustain its momentum in delivering further operating income and free cash flow growth. This growth is supported by Amazon's strategic initiatives, including leveraging AWS's AI capabilities, expanding its digital advertising business, and optimizing its retail operations.
Based on InvestingPro's Fair Value analysis, Amazon appears to be trading near its fair value, with analysts maintaining a strong buy consensus. For detailed insights and comprehensive analysis, investors can access Amazon's Pro Research Report, part of InvestingPro's coverage of over 1,400 US stocks.
In other recent news, Intuit Inc (NASDAQ:INTU). has established a strategic partnership with Amazon, positioning QuickBooks as the preferred financial management solution for Amazon sellers. The collaboration aims to provide integrated financial tools to millions of Amazon sellers, facilitating real-time financial updates and streamlined tax filing.
This partnership will also offer personalized loans through QuickBooks Capital to eligible sellers, aiming to simplify the funding process for business expansion.
In parallel, Amazon and Walmart (NYSE:WMT) Inc. have reported record-breaking sales during the Black Friday and Cyber Monday events. Analysts from Piper Sandler anticipate robust IT spending, which bodes well for tech stocks, while BofA Securities maintains a positive outlook for Amazon shares, particularly due to promising AWS developments.
Microsoft Corporation (NASDAQ:MSFT) also announced a 16% year-on-year increase in Q1 FY2025 revenue, reaching $65.6 billion, with its cloud unit's revenues surpassing $38.9 billion. Analyst firms including TD Cowen, Citi, Mizuho (NYSE:MFG), and Goldman Sachs (NYSE:GS) have maintained their positive ratings on Microsoft's stock.
These are recent developments in the operations and strategic decisions of Amazon, Microsoft, and Intuit Inc.
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