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On Thursday, Piper Sandler adjusted its price target for Amazon.com (NASDAQ:AMZN) stock, reducing it to $215 from the previous $265, while retaining an Overweight rating. According to InvestingPro data, Amazon's stock, currently trading at $191.10, shows signs of being oversold based on technical indicators, while maintaining strong financial health metrics with an overall "GREAT" rating. The firm's analysis pointed to a variety of factors affecting the company, with expectations set for Amazon's first-quarter revenue to be around $153 billion, which falls within the company's own forecast range of $151 to $155 billion. This projection aligns with the consensus estimate of $155 billion among other analysts. The company has demonstrated solid growth fundamentals, with revenue reaching $638 billion in the last twelve months and maintaining a healthy gross profit margin of 49%.
Piper Sandler's forecast also includes a 17% year-over-year growth for Amazon Web Services (AWS), which is consistent with wider market expectations. Looking ahead to the second quarter, the firm anticipates Amazon will provide a revenue guidance range between $157 and $162 billion, translating to a 6-10% year-over-year growth, and an operating income guidance ranging from $14 to $18 billion.
The revised price target comes after adjustments in the estimated growth for Amazon's advertising revenue by approximately 1% and similar reductions for the online stores and third-party (3P) services. Despite the lowered price target, Piper Sandler's stance on Amazon remains positive, reaffirming the Overweight rating and suggesting continued confidence in the stock's performance.
The adjustments made by Piper Sandler reflect the complexities inherent in predicting the financial outcomes of a company as large and multifaceted as Amazon. The firm's analysts continue to monitor the various segments of Amazon's business, including its dominant cloud computing division, AWS, and its expansive e-commerce platform, which includes both direct sales and services provided to third-party sellers. For deeper insights into Amazon's valuation and growth prospects, InvestingPro subscribers can access comprehensive analysis, including 10+ additional ProTips and detailed financial metrics in the Pro Research Report, helping investors make more informed decisions about this prominent player in the Broadline Retail industry.
In other recent news, Amazon reported a robust financial performance for 2024, with total revenue increasing by 11% year-over-year to $638 billion. The company's operating income saw a significant rise of 86%, reaching $68.6 billion, while its cloud service, AWS, experienced a notable 19% revenue growth to $108 billion. In a related development, Truist Securities adjusted its price target for Amazon to $230, citing concerns over tariffs, but maintained a Buy rating, indicating confidence in Amazon's market position despite potential short-term challenges. Additionally, Amazon has halted orders for products from China and other Asian countries, a move seen as a response to tariff concerns. This decision has impacted vendors, some of whom received sudden cancellations of substantial orders. The company's annual shareholder letter emphasized transparency, providing insights into Amazon's financial health and strategic priorities. Amazon's diverse business operations, including e-commerce, advertising, and cloud services, continue to gain market share, according to Truist Securities.
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