Amazon, the well-known online retail giant, recently caught the attention of Wall Street analyst Mark Mahaney from Evercore ISI. In his evaluation, Mahaney expressed a neutral stance on the company’s stock, setting a price target of $182.00.
Despite this neutral outlook, Mahaney highlighted several factors that contribute to his positive assessment of Amazon. He believes that the company’s Q4 revenue and operating income estimates are not only reasonable but also have the potential for upside variance. Mahaney’s optimism stems from positive holiday retail sales trends, improved capacity utilization leading to retail operating margin expansion, and a decrease in cloud optimization costs impacting Amazon Web Services (AWS) profitability. Additionally, he expects a slight acceleration in AWS revenue growth, which, combined with conservative investor expectations, adds to the positive outlook for the stock.
The projected financials for Amazon’s Q4 align with or slightly lean towards conservative estimates, indicating a cautious yet realistic evaluation. The report also takes into account the potential early benefits of Prime Video with Ads and historical trends of increased operating margin in Q1. Furthermore, CapEx trends and free cash flow (FCF) margins are expected to improve, consistent with historical performance. These factors, along with ongoing restructuring efforts that may lead to additional cost savings, provide a solid foundation for Mahaney’s Buy rating.
In another report released on the same day, RBC Capital also maintained a Buy rating on Amazon’s stock with a $180.00 price target.
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Amazon.com, Inc., founded by Jeffrey P. Bezos in July 1994, is headquartered in Seattle, WA. The company provides online retail shopping services and generates revenue from its cloud computing services. It operates through three business segments: North America, International, and Amazon Web Services (AWS). The North America and International segments encompass retail sales of consumer products and subscriptions, such as Amazon Prime membership fees. AWS generates revenue from global sales of compute, storage, database, and other service offerings.
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