Amazon stock price target raised to $295 from $260 by Benchmark

Investing.com - Benchmark raised its price target on Amazon.com (NASDAQ:AMZN) to $295.00 from $260.00 on Friday, while maintaining a Buy rating on the stock. The new target remains below the Street’s high target of $306, according to InvestingPro data, which also shows Amazon trading near its 52-week high with shares currently at $245.92.

The price target increase represents a 13.5% boost from Benchmark’s previous valuation, reflecting growing confidence in Amazon’s business trajectory despite ongoing investment periods. This optimism comes as the $2.63 trillion market cap retailer maintains 10.87% revenue growth over the last twelve months.

Benchmark noted that Amazon’s AWS cloud division reached 20% growth in the third quarter, earlier than the firm’s expectation that this milestone would be achieved in the fourth quarter.

The research firm acknowledged that Amazon stock can be "difficult to own" during investment periods, specifically citing current data center buildouts and satellite launches that are pushing free cash flow into negative territory. InvestingPro data shows Amazon operates with a moderate debt level while maintaining $13.48 billion in levered free cash flow, with cash flows sufficient to cover interest payments.

Benchmark expressed optimism that AWS growth will continue to accelerate and operating income margins will resume an upward trajectory, despite the absence of a "marquee AI contract announcement" from the company. Amazon currently trades at a P/E ratio of 37.69, which InvestingPro identifies as high relative to peers, though the company’s PEG ratio suggests potential value relative to its growth rate.

In other recent news, Amazon’s third-quarter results have caught the attention of several analyst firms, leading to increased price targets for the company. The company reported revenue trends that exceeded expectations, with Amazon Web Services (AWS) experiencing a 20% growth on a foreign-exchange neutral basis. This growth marked AWS’s highest rate since 2022, showcasing a notable acceleration compared to competitors like Microsoft Azure and Google Cloud Platform. Following these results, Stifel raised its price target for Amazon to $295, while UBS increased its target to $310, both maintaining a Buy rating. Cantor Fitzgerald also raised its target to $315, citing Amazon’s revenue and EBIT exceeding Street estimates. Truist Securities adjusted its target to $290, highlighting AWS as a standout performer. DA Davidson joined in, setting a new price target of $300, emphasizing the strong reacceleration in AWS. These developments indicate a positive outlook from analysts regarding Amazon’s recent performance and future prospects.

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