Amazon.com stock got a price-target hike from an analyst Monday, who cited data reflecting strong consumer spending along with positive signs for the company's cloud business. Amazon shares were slightly lower early Monday as they work toward a potential flat base buy point.
Truist analyst Youssef Squali upped the firm's price target on Amazon stock to 265 from 230 and reiterated a buy rating in a note to clients Monday.
"We believe North American revenue is tracking virtually to consensus estimates quarter-to-date (through Sept. 24), reflecting a resilient consumer, sustained growth in ad revenue, faster growth at AWS and higher operating margins year-over-year," Squali wrote to clients. "This even as the company invests aggressively in AI, AWS, logistics and Project Kuiper."
On the stock market today, Amazon stock fell by less than 1% to close at 186.33. The stock has formed a consolidation pattern with a 201.20 buy point, according to MarketSurge.
Closing Out Q3
Monday marks the final day of Amazon's third quarter. The company is expected to report Q3 earnings late in October. Analysts project, on average, that Amazon's revenue will rise 9.9% to $157.2 billion, according to FactSet.
Squali said that Truist Card data indicates Amazon's U.S. revenue is tracking in line with current consensus of $95.4 billion for the third quarter. That gives the analyst confidence that Amazon is on track to meet overall consensus revenue estimates, the note added.
The 265 price target for Amazon stock reflects Truist's estimates for Amazon's fiscal year 2025 value, compared to its fiscal year 2024 target of 230.
"Amazon is our favorite mega cap currently as it continues to gain share of global e-commerce and improve its value proposition to both merchants and consumers," Squali wrote. "It is also one of the best ways to play cloud, AI, digital ads and global logistics."
Amazon stock fell following its second quarter earnings report in early August, which showed lower-than-expected revenue. The results prompted concern from some investors that a trend of consumers trading down on price will cut into improvements for Amazon's retail margins.
Truist analysts expect Amazon's capital expenditures will "remain elevated" as its builds up its AI-related infrastructure. The company's Project Kuiper satellite internet business could also weigh on Amazon's North American margins, the Truist report added, as the company scales up satellite launched. But Squali said the effort could pay "dividends over the medium/long term."
Amazon Stock: Consolidation Buy Point
With its recent action, Amazon stock is working up the right side of a 12-week consolidation pattern. That's despite a recent four-day downtrend.
MarketSurge has identified a 201.20 buy point on Amazon's daily chart. That would represent a return to highs the e-commerce giant reached in early July, before the stock slumped.
In a healthy sign, Amazon rebounded above its 200-day and 50-day moving averages in early September. Shares have held above those levels since.
Amazon stock is up more than 20% this year after an 81% rally in 2023.
