Baird has reaffirmed its positive stance on Amazon.com, Inc. (NASDAQ: NASDAQ:AMZN), maintaining an Outperform rating and a price target of $213.00.
The endorsement comes amid expectations of increased operating expenses due to the company's ongoing investment in data center and infrastructure expansion.
Baird suggests that these investments could pose risks to the consensus operating income forecasts for the fourth quarter of the current year and the upcoming year.
The firm anticipates that there may be a need for adjustments in sell-side expectations following Amazon's third-quarter earnings report or as the fourth-quarter reports approach. Despite potential revisions to analyst forecasts, Baird's stance remains favorable towards Amazon's stock, especially in light of current market prices or potential future declines.
Baird's outlook is supported by the robust performance of the e-commerce sector and the anticipated growth of Amazon Web Services (AWS). The analyst from Baird sees potential in Amazon's cloud and advertising revenue streams, which are expected to contribute incrementally in the next year.
In other recent news, Amazon has been the center of several significant developments. The company's Prime Big Deal Days event set a record for the largest October shopping occasion in the company's history, with Prime members globally saving over $1 billion.
Analysts from Wells Fargo maintained an Equal Weight rating on Amazon, while Pivotal Research initiated coverage with a Buy rating highlighting the company's growth potential, particularly in its AWS cloud segment. BMO Capital Markets and DA Davidson also maintained an Outperform and Buy rating respectively, based on Amazon's logistics and operational capabilities.
Amazon, along with other tech giants, proposed an alternative power payment plan for data centers in Ohio, aiming to establish a more equitable framework for power payments while addressing utility companies' concerns. However, Amazon's involvement in a carbon offset credit deal raised concerns among Indigenous organizations in Brazil, who claimed they were excluded from discussions.
Lastly, Amazon integrated Apple (NASDAQ:AAPL) TV+ into its Prime Video service in the US, marking a significant collaboration aiming to enhance the range of streaming content for subscribers.
InvestingPro Insights
Amazon's financial metrics and market position offer additional context to Baird's optimistic outlook. According to InvestingPro data, Amazon boasts a substantial market capitalization of $1.98 trillion, underlining its dominant position in the tech and retail sectors. The company's revenue growth of 12.32% over the last twelve months and a robust EBITDA growth of 61.87% in the same period align with Baird's positive stance on the company's potential.
InvestingPro Tips highlight Amazon's strength as a "prominent player in the Broadline Retail industry" and note that it "operates with a moderate level of debt," which could provide flexibility for the ongoing investments in data centers and infrastructure mentioned in the article. Additionally, the tip that "cash flows can sufficiently cover interest payments" suggests financial stability to support these expansions.
While Amazon's P/E ratio of 44.29 indicates a high earnings multiple, an InvestingPro Tip points out that the company is "trading at a low P/E ratio relative to near-term earnings growth." This could support Baird's view that the stock remains attractive at current market prices or potential future declines.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Amazon, providing a deeper understanding of the company's financial health and market position.
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