Amazon.com (AMZN) PT Raised to $180 at UBS; Bulllish on Prime Video Ads

UBS analyst Lloyd Walmsley raised the price target on Amazon.com (NASDAQ: AMZN) to $180.00 (from $175.00) while maintaining a Buy rating, saying Prime Video ads bolster the margin case.

The analyst commented, "We think the insertion of video ads into Prime Video content will unlock substantial revs at high incremental margins, bolstering the margin bull case (see our note, "How high can retail margins get?"). The move looks well timed given inflecting budget shifting to CTV amidst cord cutting. We est. that Prime Video ads in the U.S. alone could add $6.2B/$0.40 in incremental revs/EPS over time (Figure 1), and add ~1.2% to N.America retail margins (using '24 as a base, though it likely takes more time to scale). We increase our ad rev est to $55.8B in '24 (from $52.7B prev) and increase NA retail margins to 5.4% (from 5.0%). We think this initially comes from linear brand budgets but over time could include DR objectives, with potential to eventually compete for ad dollars with other performance driven platforms like Google and Meta."

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