Amazon stock price target raised to $290 from $245 by Oppenheimer

Investing.com - Oppenheimer has raised its price target on Amazon.com (NASDAQ:AMZN) to $290 from $245 while maintaining an Outperform rating, citing accelerated growth in Amazon Web Services (AWS). This target represents significant upside from the current price of $222.86, with analysts across Wall Street setting targets ranging from $230 to $306. According to InvestingPro data, Amazon’s PEG ratio of 0.58 suggests the stock is trading at a low P/E relative to its growth rate.

The firm noted that AWS revenue growth accelerated to 20% year-over-year in the third quarter, up from 17% in the second quarter, with AWS "gaining momentum." Amazon added 3.8 gigawatts (GW) of capacity in the past 12 months and is on track to double its capacity by 2027, reaching four times its 2022 levels. This cloud expansion contributes to Amazon’s overall revenue of $670 billion, which has grown 10.87% over the last twelve months.

Oppenheimer projects fourth-quarter AWS revenues to grow 22%, but considers this estimate conservative assuming $3.2 billion per new GW. Project Rainier data center is currently 23% online with 7 of 30 buildings operational, reaching 2.2 GW capacity. InvestingPro analysis shows Amazon maintains a "GREAT" financial health score of 3.2, with cash flows that sufficiently cover its moderate debt levels – crucial factors for supporting this massive infrastructure expansion.

Total EBIT is 9% above Oppenheimer’s estimates and 7% above Street estimates, excluding one-time items. AWS commentary was more bullish than in the second quarter, with most of the earnings call focused on cloud, AI, and chips.

Amazon’s advertising revenues grew 22% excluding foreign exchange effects, matching the second quarter’s growth rate. Oppenheimer’s new price target assumes 10x FY26 AWS revenue and 6x E-commerce gross profit, or 29x EBIT.

In other recent news, Amazon.com has seen a series of analyst upgrades following its strong financial performance. Morgan Stanley raised its price target for Amazon to $315 from $300, highlighting the company’s better-than-expected third-quarter results and AWS’s year-over-year growth acceleration to 20%. Similarly, Raymond James increased its target to $275 from $230, noting AWS’s impressive performance surpassing growth expectations. Telsey Advisory Group also boosted its target to $300 from $265, maintaining an Outperform rating based on a higher enterprise value to EBITDA multiple. BMO Capital raised its target to $300 from $280, emphasizing the significant acceleration in AWS growth. Citizens followed suit, increasing its target to $300 from $285, citing Amazon’s revenue and operating income exceeding the high end of guidance. These developments reflect a positive outlook on Amazon’s financial health and growth potential, as seen by various analyst firms.

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