It may not seem like much, but 80% of the world’s retail business is still offline, and more than 85% of IT spending is still done on-premises. Amazons (NASDAQ:AMZN) Main business content. These are just some of the points that CEO Andy Jassy recently made in his annual letter to shareholders.
Bank of America’s Justin Post, a five-star analyst ranked in the top 1% of stock experts on the Street, gave a positive review of the letter.
“Penetration remains low in core markets, retail margin efficiencies will further increase in 2024, international markets will become more profitable, migration to cloud will accelerate again, and Prime advertising will continue to be strong going forward.” It’s a constructive letter that suggests growth,” Post said.
Unsurprisingly, Jassy’s letter also included his own views on AI, which he said could be the “biggest technology revolution since the cloud.” The analyst outlined what he called a “three-tier stack strategy” and suggested that cloud migration, which ends in 2023, is “on the rise again.”
Additionally, Prime Video has over 200 million monthly viewers. Jassy believes the service has the potential to become “a large and profitable business in its own right.” This is due to a focus on exclusive content, marketplace initiatives (like his HBO on Prime Video), and the introduction of advertising within Prime Video. Jassy also pointed out that sponsored ads played a key role in last year’s 24% year-over-year increase in ad revenue. For Post, it was the comments about bringing the business back into the black that “suggested prospects for significant growth in advertising.”
A review of our fulfillment business also highlighted the continued benefits of localization, with costs to serve falling year-on-year in 2023 for the first time since 2018, despite a 70% increase in same-day/overnight deliveries ( ($0.45 less per piece). In 2024, opportunities remain to further improve cost of service, with a particular focus on “inbound fulfillment architecture and inventory placement.”
Overall, for the Post, the letter addresses all of Amazon’s “must-haves” in 2024. “Continued retail margin improvement presents retail margin opportunities in 2025 above 2018 levels, and cloud market is improving with less cost focus and renewed migration (suggesting this) “The company’s revenue growth is accelerating) and there is potential for advertising upside from Prime,” the 5-star analyst said. “Amazon’s better position on AI (given its concerns about Azure) is also positive for the stock’s valuation in our view, and perhaps a multi-model approach would be a benefit to the perceived OpenAI-powered There are some advantages to Azure’s strengths.
Therefore, Post rates Amazon stock a “buy” and has a price target of $204. This number implies an 11% upside potential from current levels. (Click here to see post performance)
Post is just one of many Amazon bulls on Wall Street. In fact, all analysts support this. Based on buys only – 41 total – the stock claims a consensus rating of Strong Buy. The average price target is $210.92, with room for ~15% one-year upside. (look Amazon stock price prediction)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. Content is for informational purposes only. It is very important to perform your own analysis before making any investment.
