On Tuesday, BMO Capital Markets sustained its positive stance on Amazon.com Inc (NASDAQ:AMZN), maintaining an Outperform rating and a $230.00 price target. The firm's analysis suggests an anticipated increase in cloud growth for the third quarter of 2024 (3Q24E), projecting a 20% year-over-year rise. This outlook is bolstered by expectations of optimization normalization in the second half of 2024 (2H24E) and the ongoing adoption of Amazon's Bedrock service.
The report acknowledges the uncertainty surrounding consumer spending patterns, noting a "consumer trade-down effect" as a significant variable for the latter half of the year. Despite this, the firm observed a robust back-to-school season, which could help counterbalance weaker sales in beauty, electronics, and home goods.
BMO Capital has chosen to adjust its 2025E Gross Merchandise Volume (GMV) growth forecast slightly downward from 10% to 9%. However, the firm's thesis regarding the potential for Retail Free Cash Flow (FCF) unlocking remains intact. The analyst's commentary emphasized the reiteration of the Outperform rating and the maintenance of the $230 target price, signaling confidence in Amazon's continued performance.
The firm's outlook for Amazon reflects an analysis of various market factors and internal company developments. The report highlights the potential for growth in Amazon's cloud sector and the company's ability to navigate a complex consumer market. Despite the moderated growth expectations for 2025, BMO Capital's reaffirmation of its rating and price target indicates a belief in the company's strategic positioning and long-term prospects.
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