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On Friday, Susquehanna maintained a positive outlook on Amazon.com Inc (NASDAQ:AMZN) stock but lowered its price target from $275.00 to $225.00. The firm’s analysts cited a generally solid first quarter performance by the online retail giant, though they noted that the company’s operating income guidance fell short of expectations. According to InvestingPro analysis, Amazon is currently trading slightly below its Fair Value, with a P/E ratio of 33.69 reflecting the market’s strong growth expectations for this $2.02 trillion company.
In their analysis, Susquehanna highlighted Amazon’s first-quarter revenue of $156 billion, which marked a 10% year-over-year growth excluding foreign exchange impacts. This growth slightly decelerated from the previous quarter but was still 2% above Susquehanna’s estimates and largely aligned with the consensus. Online store revenues specifically grew by 6% year-over-year, also excluding foreign exchange considerations. InvestingPro data shows Amazon’s impressive five-year revenue CAGR of 18%, with the company generating $638 billion in revenue over the last twelve months. Want deeper insights? InvestingPro offers 10+ additional exclusive tips about Amazon’s financial performance.
The analysts pointed out that paid units increased by 8% year-over-year, although this was a deceleration from the fourth quarter. Amazon Web Services (AWS) continued to expand, showing a 17% year-over-year growth, again excluding foreign exchange impacts. This was a slight deceleration but still 1% above Susquehanna’s estimates. Geographically, North America revenues were slightly above estimates and consensus, while international revenues exceeded Susquehanna’s estimates by 3% and were 1% higher than the consensus.
Advertising revenue was another strong point for Amazon, growing 19% year-over-year excluding foreign exchange impacts, which was 5% above Susquehanna’s estimates and 1% above consensus. The firm noted Amazon’s broad-based strength in advertising across various platforms.
Despite the positive aspects, the analysts observed that the GAAP Consolidated Segment Operating Income (CSOI) of $18.4 billion was impacted by one-time charges related to historical returns and pre-buying of inventory due to anticipated tariffs. This profitability was still 15% above Susquehanna’s estimates and 5% above the consensus. AWS’s profitability was notably higher than expected, while North America’s profitability was in line with estimates but below the consensus. International profitability was significantly below Susquehanna’s estimates and slightly below the consensus.
Susquehanna reaffirmed its positive stance on Amazon, emphasizing the company’s long-term growth potential driven by its robust e-commerce, cloud/AI, and advertising businesses. The analysts believe that Amazon is well-positioned to handle any adverse impacts from tariffs due to its diverse product range. InvestingPro analysis supports this outlook, with Amazon maintaining a "GOOD" overall financial health score of 2.99 and strong EBITDA of $120.47 billion. For comprehensive insights into Amazon’s valuation, growth prospects, and financial health, check out the exclusive Pro Research Report, available along with 1,400+ other detailed company analyses on InvestingPro.
In other recent news, Amazon reported strong first-quarter earnings, with its revenue slightly exceeding expectations and operating income at the high end of guidance. However, the company provided a weaker outlook for second-quarter operating income, partly due to costs associated with the Kuiper satellite project and annual compensation grants. Amazon Web Services (AWS) showed a 17% year-over-year revenue growth, although it did not meet some analysts’ expectations for acceleration. The AWS operating income margin surpassed expectations, contributing to a positive assessment by JMP Securities, which raised Amazon’s price target to $250. Evercore ISI, however, lowered its price target to $260, citing mixed achievements and challenges in Amazon’s report. Stifel also reduced its price target to $245, noting that North American margins appeared weak initially but were stronger when adjusted for inventory pull-forwards. Goldman Sachs maintained a Buy rating with a $220 price target, emphasizing Amazon’s long-term growth potential. Despite these mixed assessments, analysts generally remain optimistic about Amazon’s strategic initiatives and market position.
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