Cowen cuts Amazon stock price target to $240, maintains Buy rating

On Friday, TD Cowen’s research division adjusted its financial outlook on Amazon.com (NASDAQ:AMZN), reducing the stock’s price target to $240 from $265, yet reaffirming a Buy rating on the company’s shares. Currently trading at $174.60, Amazon’s stock sits well below the broader analyst target range of $203-$306. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics, with technical indicators suggesting oversold conditions. The adjustment comes amid concerns over macroeconomic conditions, which have prompted the firm to revise its expectations for the e-commerce giant.

According to TD Cowen, Amazon is projected to report solid performance for the first quarter of 2025, with an anticipated revenue growth of 8.2% year-over-year. This forecast aligns with consensus estimates and builds upon Amazon’s impressive trailing twelve-month revenue of $638 billion, which showed 11% growth. The outlook is attributed to a strong showing from Amazon Web Services (AWS) and advertising revenues, which are expected to increase by 17.0% and 16.3% year-over-year, respectively. Additionally, the firm’s operating income prediction of $18.6 billion for the quarter is 6.5% higher than the consensus, driven by the robust performance of AWS and advertising, coupled with a reduction in service costs. With earnings scheduled for April 24, InvestingPro subscribers can access detailed financial health scores and 12 additional exclusive ProTips to better evaluate Amazon’s performance potential.

Despite the optimistic outlook for the first quarter, TD Cowen has revised its revenue and operating income estimates downward for the second to fourth quarters of 2025 and the long-term period from 2026 to 2030. The revisions reflect concerns over tariffs and a weakening consumer sentiment. The firm has trimmed its full-year 2025 revenue forecast by approximately 1%, with similar cuts made to AWS, international, and advertising revenue projections. Operating income and EBITDA estimates for 2025 have also been slightly reduced by around 1%, considering the impact of the lowered revenue expectations.

Looking further ahead, TD Cowen has decreased its revenue estimates for the years 2026 to 2030 by an average of 3.8%, with corresponding reductions in operating income and EBITDA forecasts of 3.4% and 3.7%, respectively. These adjustments reflect a lowered revenue trajectory for Amazon over the long term.

The revised price target of $240 is derived from a discounted cash flow (DCF) analysis and, despite the lowered estimates, TD Cowen maintains a Buy rating on Amazon stock. The firm indicates that the valuation remains appealing at current levels, suggesting a positive outlook for the company’s shares despite the adjustments. This view is supported by Amazon’s strong fundamentals, including a healthy gross profit margin of 49% and return on equity of 24%. InvestingPro’s comprehensive analysis, including detailed valuation metrics and growth forecasts, is available in the Pro Research Report, part of the platform’s coverage of 1,400+ top US stocks.

In other recent news, Amazon has been the focus of several significant developments. Analysts at Goldman Sachs reiterated their Buy rating for Amazon, setting a price target of $255. This analysis comes in light of new tariffs introduced by President Trump, which could impact Amazon’s first-party eCommerce business with an estimated annualized EBIT impact ranging from $5 billion to $10 billion. Despite these potential cost increases, Amazon is expected to employ strategies such as negotiating with vendors and adjusting product prices to mitigate the effects. Additionally, Amazon’s Project Kuiper is gearing up for a major launch, with its first full-scale batch of broadband satellites set to deploy from Cape Canaveral, marking a crucial step in providing global internet coverage.

Amazon’s Wondery has also joined forces with Patreon in a new podcast network program, offering exclusive content through the platform. This collaboration includes popular podcasts like "Scamfluencers" and "Killer Psyche," aiming to enhance fan interaction and broaden audience reach. Meanwhile, Amazon’s partnership with IonQ has expanded, with the IonQ Forte Enterprise quantum computer now available on Amazon Braket. This collaboration underscores Amazon’s commitment to advancing quantum computing accessibility for developers worldwide. These developments highlight Amazon’s diverse strategic initiatives amidst challenging market conditions.

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