Oppenheimer & Co analysts have lowered their fourth-quarter fiscal 2023 revenue estimates for Amazon.com, Inc’s Amazon Web Services (AWS) by 1 to 3%, which is expected to be offset by higher e-commerce margins on a reduction in its corporate headcount.
“AWS reductions are based on macro, as we believe secular growth story is intact,” the analysts wrote.
“The company continues to gain share of global e-commerce with its deep product selection, low-cost express delivery through its Prime program, and breakthrough success of Kindle, Prime Video, and Amazon Music,” they added.
Analysts at Oppenheimer also noted that Amazon’s Whole Foods acquisition creates another leg of growth through consumer packaged goods (CPG)/grocery expansion.
The analysts stated that they are maintaining their positive view on AWS as valuations have contracted significantly, while the company continues to invest in proprietary hardware and positioning itself as the operating system for cloud.
Oppenheimer is also bullish on Amazon’s advertising growth prospects, as the company’s share of digital advertising has increased from 4.5% in 2018 to an estimated 8.6% in 2022.
“As retail media is expected to continue taking share over the coming years, we expect AMZN to benefit, reaching 10.8% of total internet advertising ex China by 2025E,” they said.
Oppenheimer analysts have an “Outperform’ rating and a $130 per share price target on Amazon.com stock over the next 12 to 18 months.
Contact Sean at sean@proactiveinvestors.com