On Friday, Susquehanna reiterated its Positive rating on Amazon.com (NASDAQ:AMZN) with a steadfast price target of $220.00. The firm's analysis acknowledged Amazon's second-quarter performance as satisfactory, noting a revenue increase of 11% year-over-year excluding foreign exchange (FX) impacts. This figure slightly surpassed Susquehanna's prediction but was marginally below the wider market consensus.
Online store sales exhibited a 6% year-over-year growth when adjusted for FX, aligning with Susquehanna's forecast but falling short of the consensus by 1%. The company observed an 11% annual increase in paid units, a deceleration by one point compared to the first quarter on an absolute basis, yet stable when excluding FX factors. Amazon reported a trend of customers opting for cheaper items and highlighted its everyday essentials business's growing popularity.
Amazon Web Services (AWS) experienced a growth spurt of 19% year-over-year, excluding FX, which is a two-point acceleration from the previous quarter. The results exceeded both Susquehanna's and the consensus estimates by 2% and 1%, respectively.
The growth acceleration was attributed to an uptick in cloud workloads and migrations, with the completion of cloud optimizations and the success of generative AI solutions, which now represent a multibillion-dollar revenue run rate for Amazon.
Geographically, North America's revenue was in line with consensus and slightly above Susquehanna's projection. However, international revenue was 4% below consensus, though it did surpass Susquehanna's estimate by 1%. Advertising revenue, which grew by 20% year-over-year, did not meet Susquehanna's expectations, trailing by 3%, and was also 2% below the consensus.
Amazon's GAAP Consolidated Segment Operating Income (CSOI) was a highlight, reaching $14.7 billion and surpassing both Susquehanna's $12 billion estimate and the $13.7 billion market consensus. The report indicated that international and AWS segments outperformed expectations, while North America fell short of both Susquehanna's and consensus estimates.
In other recent news, Amazon.com Inc (NASDAQ:AMZN). has seen a flurry of analyst adjustments following its second-quarter earnings report. Susquehanna reiterated its positive rating, citing the firm's 11% revenue increase year-over-year and a 19% growth in Amazon Web Services (AWS).
Despite a slowdown in online sales growth, the firm noted the popularity of Amazon's everyday essentials business. However, JPMorgan lowered Amazon's price target from $240.00 to $230.00, while maintaining an Overweight rating.
The firm highlighted the shift in near-term drivers towards AWS, which delivered robust revenue growth and high margins. Meanwhile, Roth/MKM increased its price target for Amazon to $215, maintaining a Buy rating, and emphasized the continued strength of AWS.
InvestingPro Insights
As Susquehanna maintains a positive outlook on Amazon.com (NASDAQ:AMZN), real-time data from InvestingPro enriches this perspective with key financial metrics. Amazon's market capitalization stands at an impressive $1.92 trillion, reflecting its substantial presence in the market. With a P/E ratio of 50.32 and an adjusted P/E ratio for the last twelve months as of Q1 2023 at 49.82, the company is trading at a high earnings multiple, which suggests investor confidence in its future growth potential. Despite this, Amazon's stock is known for low price volatility, offering a sense of stability for investors.
Revenue growth remains a strong suit for Amazon, with a 12.54% increase over the last twelve months as of Q1 2023, indicating a consistent upward trajectory in its financial performance. This aligns with Susquehanna's recognition of Amazon's satisfactory revenue figures in the second quarter. Furthermore, with a robust gross profit margin of 47.59%, Amazon continues to demonstrate its efficiency in maintaining profitability.
InvestingPro Tips highlight Amazon as a prominent player in the Broadline Retail industry and underscore its ability to generate cash flows that can sufficiently cover interest payments. These insights, coupled with the fact that analysts predict the company will be profitable this year, underscore the solid financial foundation that supports Susquehanna's positive rating. For a deeper dive into Amazon's financial health and future prospects, InvestingPro offers additional tips at https://www.investing.com/pro/AMZN, with a total of 13 tips available to guide investors in their decision-making process.
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