Despite recent concerns about Amazon’s (AMZN-US) cloud-computing business, AWS, analysts remain largely positive on the company.
Oppenheimer analyst Jason Helfstein released a research report on Friday (13th), citing uncertain economic prospects, lowering his AWS revenue forecasts for the fourth quarter of last year and full-year 2023 by 1% and 3%, respectively. AWS had sales of $20.5 billion in the third quarter, compared with companywide sales of $127.1 billion.
But Helfstein is generally still optimistic about Amazon. “Amazon’s AWS division is a global leader in cloud computing and has great value.” He maintained an “outperform” rating on the stock, with a target price of 130 per share. Dollar.
Amazon rose 2.99% on Friday to close at $98.12 per share.
Businesses may cut technology spending as a precautionary measure to cut costs, although it’s unclear whether the Federal Reserve’s rapid rate hikes to fight inflation will trigger a recession.
Mizuho analyst James Lee wrote in a research report: “In an uncertain economic environment, we believe that enterprise customers are trying to suspend migration to the cloud or reduce product purchase prices to reduce IT spending, resulting in demand volatility. Although AWS has a strong Long-term customer commitment, pre-orders increased by 60% compared with the same period last year, but demand also fluctuates year by year.”
But Lee also maintained a “buy” rating and $135 price target on Amazon stock. In fact, most analysts remain bullish on Amazon. According to the FactSet survey, 49 out of 53 analysts gave a “buy” rating, another 3 gave a “continuation” rating, and only 1 thought it should be sold.
Lee said Amazon has taken several steps that should help boost the stock price, including cutting 18,000 jobs and improving productivity by optimizing shipping costs by allocating inventory, manpower and demand to the closest locations.
BofA Securities analyst Justin Prost also has a “buy” rating on Amazon, but cut his 12-month price target on the stock to $135 from $137 on Thursday.
Amazon could start the new year slowly, but consumer spending will improve and interest rates will fall by the end of 2023, he wrote in a research note. That should help boost Amazon stock.
