RBC lifts Amazon stock price target to $265 on earnings outlook

On Friday, RBC Capital Markets adjusted its financial outlook for Amazon.com, Inc. (NASDAQ:AMZN), raising the company’s price target from $255.00 to $265.00. The firm maintained its Outperform rating on the stock. The revision follows Amazon’s Q4 performance, which, according to RBC Capital’s analysis, was a mixed bag with some segments underperforming while others showed strength. The company’s stock has shown remarkable momentum, with a 46.7% price return over the past six months, according to InvestingPro data.

The report highlighted that Amazon’s fourth-quarter results saw a slight shortfall in third-party seller services and advertising revenues. However, this was counterbalanced by robust figures from Amazon Web Services (AWS) and continued outperformance in EBIT (earnings before interest and taxes). The company maintains strong profitability with a gross margin of 48.4% and has demonstrated solid revenue growth of 11.9% over the last twelve months. InvestingPro analysis reveals 15+ additional key metrics and insights available to subscribers, including detailed profitability trends and growth forecasts.

The revised price target to $265 is a reflection of these updated estimates and the reiteration of the Outperform rating. RBC Capital’s commentary underscored Amazon’s strong position in artificial intelligence (AI) and the potential for the company to keep growing its earnings. With a market capitalization of $2.51 trillion and a PEG ratio of 0.35, Amazon shows strong growth potential relative to its current valuation. This growth is seen as supportive of the new valuation, especially given AWS’s high-margin expansion and the possibility of network cost efficiencies.

The analyst noted that while Amazon is a popular stock and debates about its AI investments continue, the combination of AWS’s profitability and further reductions in network costs positions the company to sustain its earnings growth. This outlook is particularly relevant in light of Amazon’s leading role in AI and the expected easing of capacity constraints later in the year. For comprehensive insights into Amazon’s valuation and growth prospects, investors can access the detailed Pro Research Report available exclusively on InvestingPro, which covers over 1,400 top US stocks with expert analysis and actionable intelligence.

Amazon’s stock price adjustment by RBC Capital Markets is based on the company’s financial performance and market position, without any speculative or forward-looking statements beyond the immediate outcomes and expectations.

In other recent news, Amazon has been the focus of several financial firms. Cantor Fitzgerald maintained an Overweight rating on Amazon with a price target of $270, highlighting Amazon’s fourth-quarter results and the steady growth of Amazon Web Services (AWS). Telsey Advisory Group reiterated its Outperform rating and a $275 price target, praising Amazon’s performance and first-quarter guidance. BMO Capital Markets increased its price target to $280 from $265, citing expected growth in AWS. BofA Securities raised its price target from $255 to $257, noting a strong holiday season that boosted retail sales. Lastly, Goldman Sachs updated its price target to $255 from $240, emphasizing Amazon’s solid fourth quarter performance. These are recent developments and represent a range of perspectives on the company’s financial health.

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