Jefferies maintains Buy on Amazon stock, price target steady at $225

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Jefferies maintains Buy on Amazon stock, price target steady at $225

On Thursday, Jefferies reiterated a Buy rating on (NASDAQ: AMZN ) with a consistent price target of $225.00. The firm's assessment follows Amazon's annual shareholder letter, which underscored the company's achievement in delivering products at unprecedented speeds while simultaneously reducing per-unit service costs for the first time since 2018.

Amazon reported delivering over 7 billion items to Prime members in the same day or the next day during 2023. This milestone includes more than 4 billion packages in the U.S. and over 2 billion in Europe. The e-commerce giant increased its same-day or next-day deliveries by approximately 70% last year, contributing to a growth of over 20% year-over-year in its everyday essentials business for the fourth quarter of 2023.

The company also saw a reduction in cost to serve in the U.S. by more than $0.45 per unit and anticipates further reductions in 2024. Amazon plans to focus on its inbound fulfillment architecture and inventory placement to continue improving efficiency.

Internationally, Amazon's store in Mexico turned profitable as of the fourth quarter of 2023. This is a notable milestone, as the consensus suggests that Amazon's international operations will return to positive operating income in the third quarter of 2024 after a profitable period from the second quarter of 2020 to the second quarter of 2021.

Amazon's Prime Video advertising has also seen a strong start, with the platform reaching over 200 million monthly viewers across its most popular entertainment offerings. The company is confident that Prime Video will evolve into a large and profitable venture.

In addition, Amazon is preparing to launch its first production satellites in 2024 through Project Kuiper, with the aim of providing broadband connectivity to hundreds of millions of households currently without it. This initiative is expected to not only generate significant revenue but also bolster growth in Amazon's existing businesses.

The company is set to double its 58 U.S. same-day fulfillment facilities, which are already the lowest cost to serve within its network. These facilities can prepare an order for shipment in as little as 11 minutes.

Amazon is also focusing on advancing automation in its robotics, with innovations in multi-floor storage, trailer loading and unloading, large pallet mobility, and more flexible sortation throughout the outbound process.

Lastly, Amazon boasts the widest array of NVDA instances among providers, acknowledging the scarcity and cost challenges as customers expand their models and applications. Amazon's custom AI training chips, Trainium and Inferentia, are utilized by various customers including Anthropic, Airbnb, Hugging Face, Qualtrics, Ricoh, and Snap.

The company's CEO, Andy, emphasized the significant potential for growth, noting that approximately 80% of global retail sales still occur in physical stores and 85% of global IT spending is on-premises. With the expectation that these dynamics will eventually shift online, Amazon's leadership in e-commerce and cloud services positions it for continued expansion.

InvestingPro Insights

Following Jefferies' endorsement of (NASDAQ:AMZN), InvestingPro data underscores the financial robustness of the company. Amazon's Market Cap stands at an impressive $1960.0B, reflecting its significant presence in the market. With a P/E Ratio of 63.97, it's clear that investors have high expectations for the company's growth, despite it trading at a high earnings multiple. In terms of performance, Amazon has shown a solid Revenue Growth of 11.83% over the last twelve months as of Q1 2023, which aligns with the operational efficiencies and expansion activities highlighted in the shareholder letter.

InvestingPro Tips suggest that Amazon is a prominent player in the Broadline Retail industry, which is evident from its substantial growth in same-day or next-day deliveries. The company's moderate level of debt and its position near its 52-week high also reflect financial stability and investor confidence. For readers looking to delve deeper into Amazon's financial metrics and gain more insights, there are 14 additional InvestingPro Tips available, which can be accessed with an exclusive 10% discount using the coupon code PRONEWS24 on a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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