UBS raises Amazon stock price target to $275, maintains Buy

On Thursday, UBS analyst Stephen Ju increased the price target for Amazon.com (NASDAQ:AMZN) shares, moving it up to $275 from the previous target of $264. Currently trading at $233.37 with a market capitalization of $2.45 trillion, Amazon is near its 52-week high of $241.77. The firm continues to recommend a Buy rating on the stock. Ju’s revision comes ahead of Amazon’s fourth-quarter earnings report, scheduled for release on February 6, 2025. InvestingPro analysis shows the stock trading above its Fair Value, with multiple valuation metrics available in the Pro Research Report.

In his analysis, Ju has made substantial updates to his financial model for Amazon, including adjustments for foreign exchange (FX) rates, which he notes could act as a headwind to the company’s revenue. Despite these concerns, InvestingPro data reveals Amazon’s robust revenue growth of 11.93% over the last twelve months, with a GREAT financial health score of 3.2. Additionally, he has slightly reduced his capital expenditure (CapEx) projections for Amazon’s e-commerce operations.

UBS’s report includes a recalibration of Amazon’s current global infrastructure for fulfillment, sorting, and same-day delivery. This assessment led to the conclusion that Amazon may be approaching a period of lower capital intensity for its e-commerce segment. According to Ju’s forecasts, Amazon might not need to expand its fulfillment center capacity until 2026, given an approximately 10% expected growth in global gross merchandise value (GMV) for 2025 and 2026.

While Amazon is anticipated to continue increasing its same-day delivery capabilities with additional distribution stations this year, the costs associated with these are significantly lower than those for larger fulfillment centers. Despite maintaining an estimated $30 billion in CapEx for Amazon’s e-commerce business for 2025, Ju suggests that there could be downward revisions throughout the year, which may lead to potential free cash flow (FCF) upside. With analyst price targets ranging from $200 to $306 and a strong consensus recommendation of 1.4, investors seeking deeper insights can access comprehensive analysis and 10+ additional ProTips through InvestingPro’s detailed Research Report.

In other recent news, Amazon has been the focus of several significant developments. Bernstein analysts, led by Nikhil Devnani, have increased their price target on Amazon shares, maintaining an Outperform rating. This adjustment follows Amazon’s robust third-quarter performance and a successful Re:Invent event. Meanwhile, JMP Securities has maintained a Market Outperform rating on Amazon with a steady price target of $285.00, adjusting their growth expectations for Amazon’s cloud division, Amazon Web Services (AWS), in light of recent results from Microsoft (NASDAQ:MSFT)’s Intelligent Cloud segment.

Amazon is also facing a lawsuit alleging covert tracking of consumer movements via mobile devices using a piece of code known as Amazon Ads SDK. In addition, Amazon has 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. Furthermore, the UK’s Competition and Markets Authority is considering an investigation into AWS 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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