Amazon’s (NASDAQ: AMZN) Q4 and FY 2024 earnings report, released on February 6, was a double beat. Even though both earnings per share (EPS) and revenue came in above estimates, the markets weren’t exactly satisfied.
On the day, Amazon stock closed at $238.74 — subsequently plummeting to $229.15.
By press time on February 10, the price of an AMZN share had slightly ticked up to $230.23, marking a 4.94% increase on a year-to-date (YTD) basis.
Picks for you
The reason behind the decline was simple — the tech titan had issued unexpectedly weak guidance. For the current quarter, Amazon forecasts sales between $151 billion and $155.5 billion — whereas consensus estimates had them pegged at $158.5 billion.
Despite the dip, Wall Street equity researchers aren’t perturbed — in the aftermath of the earnings report, many analysts have revised their price targets — and their perspectives are quite bullish.
Weak guidance does little to sour analysts on Amazon stock
Citi analyst Ronald Josey maintained a previously issued ‘Buy’ rating on February 7. The researcher also cut his price target from $275 to $273, a mark which equates to an 18.57% increase from the current price of Amazon stock.
After the retail and e-commerce giant reported its Q4 and FY 2024 earnings, Josey and Citi came away from the print ‘incrementally positive’ on the stock. In a note shared with investors, Josey argued that the company’s investments should result in accelerating AWS demand.
In addition, the analyst opined that the lower-than-expected guidance was attributable to forex, and when excluding the one-time $920M impact from server disposals, Q4’s operating income would have been (above guidance) $22.1B. Finally, Josey told investors to ‘buy the dip’.
Likewise, Tom Forte of Maxim Group reiterated a prior ‘Buy’ rating on the same day. Forte increased his price forecast for Amazon stock from $260 to $280. His price target implies a 21.61% upside.
While Forte did refer to management’s guidance as ‘weak’, he highlighted consensus beating revenue, which came in at the upper end of management’s prior guidance, as well as 18.9% sales growth with AWS as sufficient reasons to hike his price target.
Finally, Barclays researcher Ross Sandler doubled down on an ‘Overweight’ rating. The analyst upped his price target from $235 to $265, some 15.1% higher than the current price of AMZN stock. Sandler gave praise to the company’s execution in AWS and retail but warned that capital expenditures would likely ‘go vertical’ as the artificial intelligence (AI) arms race continues.
Featured image via Shutterstock
