Jefferies analysts have reiterated their ‘Buy rating on Amazon.com Inc (NASDAQ:AMZN, ETR:AMZ) stock in a recent note to investors, setting a price target of $225, indicating a potential upside of 21% from the current price of $185.95.
In their analysis, Jefferies highlighted key takeaways from Amazon's annual letter to shareholders, emphasizing the company's achievements and growth prospects. Amazon reported record delivery speeds in 2023, successfully delivering over 7 billion items to Prime members on the same-day or next-day.
This achievement, coupled with a reduction in the cost to serve per unit for the first time since 2018, reflects Amazon's commitment to operational efficiency and customer satisfaction, according to analysts.
“With (around) 20% of global retail sales occurring online and 85% of global IT spending still on-prem, we see a long runway for growth given Amazon’s market leadership in eCommerce and cloud,” Jefferies analysts wrote.
Jefferies also pointed out Amazon's profitability in international markets, with Mexico becoming the latest country to turn profitable in the fourth quarter of 2023. Additionally, the success of Prime Video advertising and the upcoming launch of production satellites under the Kuiper project were cited as further drivers of growth.
Meanwhile, Amazon's focus on automation and robotics, coupled with its broad collection of Nvidia instances and custom AI chips, positions the company well for future technological advancements.
With a significant portion of global retail sales and IT spending still conducted offline, Jefferies analysts believe Amazon's market leadership in e-commerce and cloud services presents substantial growth opportunities in the years ahead.
In a recent shareholder letter, Amazon CEO Andy Jassy highlighted that around 80% of global retail sales are still done in physical stores and 85% of global IT spend is still on-premises.
“If you believe these share dynamics will flip over time, then Amazon has plenty of growth ahead given their market leadership in both categories,” Jefferies noted.