BofA Securities analyst Justin Post reiterated a Buy rating on$Amazon (AMZN.US)$ with a price target of $204.
Post expects Amazon's first-quarter earnings to reflect positive trends with a revenue forecast of $143 billion, closely aligning with market expectations.
The focus will be on potential upside from AWS and advertising and, according to the analyst, a possible retail segment outperformance.
For AWS, a quarter-over-quarter growth of $545 million and a 16% year-over-year increase are likely slightly ahead of the market's 15% expectation.
Operating profit will likely hit $11.5 billion, with a cautious eye on a possible $12 billion prediction by others.
Looking ahead to the second quarter, he adjusted revenue expectations by $1.5 billion to $149.9 billion, considering the recent U.S. dollar depreciation and potential demand shifts due to seasonal sales events.
Despite these adjustments, he maintained an optimistic outlook for Amazon's continued growth in eCommerce, bolstered by data indicating a slight acceleration in U.S. online spending.
Post added that the forthcoming Worldwide Developer Conference (WWDC) and new AI software features would likely be key growth drivers, potentially boosting the company's stock performance amidst a broader aim for multiple expansions in 2024.
Post said data indicates a slight acceleration in U.S. eCommerce spending, suggesting a strong first quarter for Amazon, particularly in retail.
The analyst also highlights Amazon's Big Spring Sale and the introduction of Prime Video ads as factors contributing to revenue growth. He expects Amazon's strategic shifts and operational efficiencies to support margin expansion and drive stock performance.
Post writes that despite a forward P/S multiple increases year-to-date, Amazon's valuation remains below its ten-year average, indicating room for multiple expansion.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors