Analysts bullish on Amazon as tailwinds drive 'durable multi-year profitability'
Both Morgan Stanley and Bank of America released notes covering Amazon (NASDAQ:AMZN) on Thursday, maintaining their bullish stances on the stock.
Morgan Stanley analysts, who have an Overweight rating on the stock, upped the Amazon price target to $185 per share. They said the tech powerhouse is primed for durable earnings per share (EPS) and free cash flow (FCF).
Prime Video ads and North American retail efficiencies are driving durable multi-year profitability, said the analysts. «We raise '24/25 EBIT/EPS by ~9%/14% driven by 1) Prime Video ads (coming 1/29) and 2) faster improvements in N.A. retail profitability (fulfillment/shipping efficiency, merch margins).»
Morgan Stanley now models $5.55 of 2025 EPS and $7.40 of FCF/share. The analysts noted that even the bank's new $185 price target implies a discount to tech/retail peers.
Meanwhile, Bank of America analysts raised the bank's price target for Amazon to $185 from $168, reiterating a Buy rating.
Bank of America noted that Amazon's management sees a “gigantic” opportunity for AI-driven demand, and they believe AWS acceleration and greater visibility on Cloud AI revenues will be key positives in 2024.
«Logistics as a Service (LaaS) traction, appreciation of Amazon’s AI chip technology, and Prime ads strength are other potential positives,» wrote the analysts.
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