On Friday, Scotiabank (TSX:BNS) analyst Nat Schindler updated the price target for Amazon.com (NASDAQ:AMZN) to $306.00, a significant increase from the previous $246.00. Currently trading at $235.42, Amazon has demonstrated remarkable strength with a 50% return over the past year. The analyst reaffirmed a Sector Outperform rating on the stock, citing Amazon Web Services (AWS) as a key driver behind the adjustment.
The new price target reflects Schindler's optimism about the accelerated growth of AWS, which is benefiting from both secular trends and the contributions of GenAI technology. With impressive revenue of $620.13 billion in the last twelve months and 11.9% year-over-year growth, Amazon continues to dominate the retail space. Despite maintaining the same projections for Amazon's retail revenue, Schindler acknowledges the potential for further growth as e-commerce continues to capture a larger share of the total U.S. retail sales market.
In addition to the revenue projections, the analyst anticipates improved cost management within the company. With a strong gross profit margin of 48.4% and an "GREAT" financial health score according to InvestingPro, Amazon demonstrates solid operational efficiency. Schindler predicts that Amazon's execution and cost discipline will lead to an expansion of operating margins. This is expected to occur even as capital expenditures and depreciation are projected to increase slightly, which the analyst notes will modestly offset estimate increases for Amazon and its peers.Want deeper insights? InvestingPro subscribers have access to 15+ additional exclusive tips and comprehensive financial analysis for Amazon.
Schindler's analysis suggests that the combination of AWS's growth and Amazon's operational efficiencies will contribute positively to the company's financial performance. The raised price target from $246 to $306 reflects these factors and indicates a bullish outlook for Amazon's stock in the near term.
Investors and market observers will likely monitor Amazon's performance closely, particularly in the areas highlighted by Schindler, to assess whether the company meets or exceeds the expectations set forth by this revised price target.
In other recent news, Amazon has seen multiple developments. The company's German division reported slight revenue gains in 2024, marking the first increase since 2021, according to the BEVH association. This rise is attributed to higher savings, boosting German consumers' confidence to spend. Furthermore, Amazon Web Services (AWS) has committed to an $8.3 billion investment to expand its cloud infrastructure in India, aiming to meet increasing customer demand for cloud services. This investment is expected to contribute significantly to India's GDP and support numerous full-time jobs.
However, Amazon has announced its exit from Quebec operations, leading to an estimated loss of 1,700 full-time jobs. The company plans to return to a third-party delivery model, utilizing local small businesses. On a positive note, Cantor Fitzgerald has maintained an Overweight rating on Amazon, forecasting growth and margin improvements for 2025. The firm emphasized AWS's robust infrastructure and well-established customer relationships as key growth drivers. Lastly, Bank of America (NYSE:BAC)'s technical strategists note a positive technical setup for Amazon's stock, indicating potential for further upward movement.
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