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On Tuesday, BofA Securities maintained a confident stance on Amazon.com (NASDAQ:AMZN), reiterating a Buy rating and a $255.00 price target for the e-commerce giant. Currently trading near its 52-week high of $241.77, Amazon has demonstrated robust performance, with InvestingPro data showing an impressive financial health score of 3.2 (rated as "GREAT"). The firm’s analysis suggests that Amazon experienced a strong fourth quarter, benefiting from effective management of fulfillment operations and workforce.
BofA Securities’ projections for Amazon’s fourth quarter sales are consistent with the general market expectations, estimating revenues at around $187 billion. With Amazon’s last twelve months revenue reaching $620.1 billion and showing growth of 11.93%, these projections appear achievable. Their anticipated GAAP operating profit of $19.7 billion surpasses the street’s forecast of $18.9 billion. This optimism is partly based on positive retail data from the fourth quarter, which is expected to bolster revenues. InvestingPro subscribers can access 14+ additional key metrics and insights about Amazon’s financial performance.
The firm also expressed a positive outlook on Amazon Web Services (AWS), Amazon’s cloud computing division. They anticipate that AWS will achieve its growth targets of 19-20%, driven in part by an expanding contribution from artificial intelligence (AI) technologies. This forecast is seen as neutral in relation to Microsoft (NASDAQ:MSFT)’s Azure cloud computing service.
Despite the favorable outlook, BofA Securities did acknowledge potential risks facing Amazon. These include uncertainties related to the impact of tariffs on future guidance, more challenging revenue comparisons in the first quarter due to the leap day in the previous year, and the possibility of increasing AWS depreciation expenses. These factors could pose challenges to Amazon’s financial performance in the upcoming periods.
In summary, BofA Securities has reiterated its Buy rating on Amazon stock, with a price target that reflects confidence in the company’s operational efficiency and growth prospects, particularly in its cloud services division. The firm’s analysis points to a robust fourth quarter performance for Amazon, with the potential to outperform market expectations in operating profit.
In other recent news, Loop Capital Markets has lowered the price target for United Parcel Service (NYSE:UPS) from $120 to $115, following the announcement of UPS’s plans to reduce its business with Amazon by 50% over the next 18 months. This decision is a strategic move by UPS, given Amazon’s significant market cap and annual revenue. The reduction in business with Amazon has had an immediate impact on UPS’s stock value.
On the other hand, Amazon has been the focus of several analyst firms. UBS analyst Stephen Ju raised the company’s stock price target to $275, maintaining a Buy rating. Bernstein analysts, led by Nikhil Devnani, increased their price target on Amazon shares to $280, attributing this adjustment to Amazon’s strong third-quarter performance. JMP Securities also upheld a Market Outperform rating on Amazon, maintaining a steady price target of $285.00.
Amazon has also increased its advertising spend on Elon Musk’s social media platform X, following a hiatus due to concerns related to hate speech. Amazon also faces a lawsuit over alleged covert tracking of consumer movements via mobile devices using Amazon Ads SDK. The company has also entered into a transaction agreement with Ranpak Holdings (NYSE:PACK) Corp., which includes the issuance of a warrant for Amazon to acquire up to 18,716,456 shares of Ranpak’s common stock. The UK’s Competition and Markets Authority is considering an investigation into Amazon Web Services over concerns of reduced competition in the UK cloud services market. These are recent developments that investors should be aware of.
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