Amazon.com (AMZN) PT Raised to $325 at Scotiabank
Scotiabank analyst Nat Schindler raised the price target on Amazon.com (NASDAQ: AMZN) to $325.00 (from $275.00) while maintaining a Sector Outperform rating.
The analyst commented: "AWS continues proving out strong ROI from its capex spending, as revenue accelerated to 28% y/y in 1Q from 24% in 4Q. While that fell short of the loftier buy-side whisper numbers of ~30%, the absolute dollar growth is immense (+$2B q/q, 1Q’s largest sequential increase ever). Additionally, CEO Andy Jassy gave solidly bullish commentary on custom silicon, noting that custom chips are now a >$20B run-rate business, giving investors confidence that AWS capex spending is generating strong ROI. Just like with GOOG, investors are willing to reward hyperscalers for heavy spending if they can prove strong ROI and margins—and with consolidated op. margins reaching a record 13.1% in 1Q, Amazon did exactly that. Management is guiding 2Q revenue $194B-$199B (16-19% y/y growth), 4% above Street, with op. income $20B-$24B (3% below), includes $1B y/y North America headwind as it ramps Amazon Leo investments in preparation for a 3Q commercial launch. We are increasing our PT to $325 (was $275), with our sum-of-the-parts analysis assuming 9.5x FY27 AWS revenue and 2.0x FY27 retail sales, while reiterating Sector Outperform."