S&P 500 cuts losses as Nvidia climbs ahead of results
On Friday, Roth/MKM made an adjustment to the price target for Amazon.com (NASDAQ:AMZN) shares, increasing it to $215 from the previous $210 while maintaining a Buy rating for the stock.
The firm's decision comes after Amazon reported its second-quarter results, which were in line with the average Wall Street estimates but fell short of more optimistic expectations.
According to Roth/MKM, Amazon's guidance for third-quarter revenue appears modest and the anticipated margins are softer, attributed to increased seasonal hiring in retail and a decline in high-value item sales.
Despite these challenges, Amazon is preparing to launch hundreds of satellites in the fourth quarter as part of its effort to establish a network that rivals Elon Musk's Starlink.
The analyst from Roth/MKM highlighted Amazon Web Services (AWS) as a continuing strong point for the company. The firm's estimates for Amazon have increased, and the analyst expressed surprise at the discrepancy between their projections and the higher figures expected by others for the second half of 2024.
The revised price target of $215 implies a valuation of approximately 15 times the estimated EBITDA for 2025. Roth/MKM suggests that the current weakness in Amazon's stock could be a buying opportunity for investors.
In other recent news, Amazon.com has experienced both ups and downs. Amazon's second-quarter results were met with varied responses from analysts.
Roth/MKM maintained a buy rating on Amazon, adjusting the price target to $215, while Goldman Sachs lowered their price target to $230, maintaining a Conviction Buy rating. On the other hand, Citi maintained a Buy rating with a price target of $245, expressing confidence in Amazon's growth trajectory.
Amazon's Q2 performance was marked by a 19% year-over-year increase in Amazon Web Services (AWS) revenue, a significant contributor to the company's robust earnings.
However, the company also reported a slowdown in online sales growth, reflecting a shift in consumer behavior towards more affordable purchasing options.
This trend was also noted by RBC Capital Markets, which suggested that Amazon's reduced retail margin and subdued Q3 revenue guidance might indicate a need for increased discounting to attract a cautious consumer base.
In addition to financial performance, Amazon's operations and future plans have been in the spotlight. The company is preparing for the launch of hundreds of satellites as part of Project Kuiper, aiming to establish a network that rivals Elon Musk's Starlink.
Amazon's capital investments for the first half of 2024 amounted to $30.5 billion, exceeding forecasts, with further increases planned for the second half of the year, mainly driven by infrastructure development for AWS.
The U.S. Federal Trade Commission has initiated an investigation into elevated grocery prices involving Amazon among other major grocery chains. As these developments unfold, investors will be closely monitoring their impact on Amazon's performance and future prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.