Amazon’s Earnings Poised for Boost from AWS, Ads, and Retail Innovation: BofA Analyst
Amazon’s upcoming first-quarter earnings report is expected to showcase positive trends driven by various factors, according to BofA Securities analyst Justin Post. The focus will be on the potential boost from Amazon Web Services (AWS), advertising revenue, and innovations in the retail segment.
Post reiterated a Buy rating on Amazon with a price target of $204, anticipating revenue to reach $143 billion, closely aligning with market expectations. Key highlights include:
– AWS is expected to see a quarter-over-quarter growth of $545 million, slightly surpassing the market’s 15% year-over-year growth projection.
– Operating profit is likely to hit $11.5 billion, with cautious eyes on a potential $12 billion forecast by other analysts.
– Looking ahead to the second quarter, revenue expectations have been adjusted to $149.9 billion, factoring in recent U.S. dollar depreciation and seasonal demand shifts due to sales events.
– Post emphasizes the importance of Amazon’s strategic shifts in the retail sector, noting the company’s Big Spring Sale and introduction of Prime Video ads as drivers of revenue growth.
– The analyst anticipates Amazon’s operational efficiencies to support margin expansion and drive stock performance amidst an overall positive outlook for eCommerce growth.
With an optimistic view on Amazon’s continued success in the eCommerce space, bolstered by data showing an acceleration in U.S. online spending, Post also points to the forthcoming Worldwide Developer Conference (WWDC) and new AI software features as key growth drivers.
Despite fluctuations in forward Price-to-Sales multiples and below-average valuation compared to the past decade, Amazon’s outlook for 2024 remains positive for potential multiple expansions.
In the latest trading session, AMZN shares saw a 0.82% increase, closing at $176.04. The market eagerly awaits Amazon’s earnings report, expected to shed light on the company’s performance across its various business segments.
