{"id":71684,"date":"2023-10-12T03:08:48","date_gmt":"2023-10-12T07:08:48","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/amazon-faces-a-near-term-cloud-but-this-analyst-sees-far-sunnier-days-ahead\/"},"modified":"2023-10-12T03:08:50","modified_gmt":"2023-10-12T07:08:50","slug":"amazon-faces-a-near-term-cloud-but-this-analyst-sees-far-sunnier-days-ahead","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=71684","title":{"rendered":"Amazon faces a near-term cloud \u2014\u00a0but this analyst sees far sunnier days ahead"},"content":{"rendered":"
\n

The recovery of Amazon.com Inc.\u2019s AWS cloud-computing business is a hot area of stock-market debate nowadays, but one analyst sees a bright picture as he looks past that issue. <\/p>\n

\u201cAdmittedly, we are not able to get investors comfortable on AWS\u2019s near-term growth rate, or the [fourth-quarter operating-income] guide,\u201d MoffettNathanson analyst Michael Morton wrote Wednesday, but he\u2019s increasingly optimistic about the company\u2019s earnings potential in 2024. <\/p>\n

\n

Morton upped his estimates for Amazon\u2019s
\n AMZN,
\n +1.81%<\/bg-quote>
\n 2024 earnings before interest and taxes to $51 billion from $45 billion, citing his heightened belief that Amazon can improve its cost centers. <\/p>\n

Read: <\/strong>The Magnificent Seven could be called the messy seven after a \u2018meh\u2019 third quarter<\/p>\n

\u201cFor a company that rarely provides a glimpse under the hood, [Chief Executive] Andy Jassy\u2019s comments on the 2Q23 call suggest $2.6B in gross profit benefit from the regionalization of the fulfillment network on \u2018a 19% reduction in miles traveled to deliver packages to customers,’\u201d Morton wrote. <\/p>\n

By his estimation, Amazon shells out $17 billion on fuel every year, so that 19% cut could mean 11 cents in savings per unit globally, he said. \u201cIt might not sound like a lot, but Amazon ships 22 billion packages per year, and it quickly adds up,\u201d Morton said. <\/p>\n

Don\u2019t miss: <\/strong>Amazon\u2019s stock sports \u2018compelling\u2019 opportunity after pullback, says analyst<\/p>\n

Morton sees other profit drivers as well, including around pricing. \u201cAfter years of Amazon absorbing higher prices from 1P [first-party] vendors, it\u2019s time for the 1P vendors to bear the costs, allowing 1P gross margins to improve, driving an incremental $3.4B in gross profit to our prior estimate,\u201d he noted. <\/p>\n

He also commented on potential top-line tailwinds, including traction with same-day and one-day shipping, which is helping the company pick up market share. Plus, Amazon\u2019s advertising business is performing better than the broader industry, in Morton\u2019s view. <\/p>\n

He has a buy rating and $189 target price on Amazon shares, which advanced 1.8% in Wednesday\u2019s session.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The recovery of Amazon.com Inc.\u2019s AWS cloud-computing business is a hot area of stock-market debate nowadays, but one analyst sees a bright picture as he looks past that issue. \u201cAdmittedly, we are not able to get investors comfortable on AWS\u2019s near-term growth rate, or the [fourth-quarter operating-income] guide,\u201d MoffettNathanson analyst Michael Morton wrote Wednesday, but […]<\/p>\n","protected":false},"author":1,"featured_media":48649,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-71684","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nAmazon faces a near-term cloud \u2014\u00a0but this analyst sees far sunnier days ahead | iFintechWorld<\/title>\n<meta name=\"description\" content=\"The recovery of Amazon.com Inc.\u2019s AWS 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