Evercore ISI hiked its price target for Amazon.com (NASDAQ:AMZN) shares from $225 to $240 and maintained an Outperform rating.
The revised target is based on a 35x multiple of the firm's projected 2026 earnings per share (EPS) of approximately $7.00 and 25x its projected 2026 free cash flow (FCF) of roughly $100 billion.
Analysts at Evercore said AMZN remains their top Large Cap Long pick, with particular emphasis on the company's intensified focus and opportunities with Prime Video.
The investment bank highlights that Amazon has improved its Prime Video offerings, including more NFL games, a WildCard Playoff game, 66 NBA games in the 2025 season, and the 2024 PPA World Championships.
The company is prioritizing the monetization of this content through advertising. During the second-quarter earnings call, Amazon CEO Andy Jassy highlighted that the advertising business unit, which has reached a $50 billion revenue run rate, was the first topic of discussion after Amazon Web Services (AWS).
Jassy also pointed out Amazon's initial participation in the Upfronts and that the company was “at the very beginning of what’s possible in our video advertising.”
Moreover, analysts at Evercore have updated their Amazon Prime Video (APV) monetization estimates, developing an interactive model to project incremental revenue and profit scenarios from APV through both advertising and subscription models.
The analysis projects that APV could generate between $3.0 billion and $5.9 billion in total revenue in 2025, contributing an additional 3% to 9% to the firm's 2024 Amazon advertising revenue estimate of $56 billion. This could potentially accelerate Amazon's advertising revenue growth to 20% in 2025, following a 19% growth in 2024.
Furthermore, Evercore ISI projects that APV could contribute between $1.8 billion and $3.3 billion in operating income in 2025, which would represent an incremental 3% to 5% to the firm's 2024 total operating income estimate for Amazon of $61 billion.
“The APV monetization ramp should help power ongoing Operating Margin expansion into 2025 and beyond,” analysts noted.