Truist analyst Youssef Squali reiterated a Buy rating on Amazon.Com Inc (NASDAQ:AMZN) with a price target of $144.00.
The analyst remains bullish on AMZN, with his proprietary tracking of North American e-commerce business showing resilient demand, which is slightly ahead of consensus estimates through July 12 (including a solid Prime Day event), and the ads business likely outperforming.
This trend also aligns with NRF data, which shows that online growth was +6.4% Y/Y in April, +8.7% in May, and +9.9% in June, reflecting a healthy consumer. Squali expects headwinds to AWS to normalize in 2H23, with growth re-accelerating in 1H24.
Notably, the analyst sees AMZN continuing to optimize and streamline its costs across the organization, driving margin expansion near and medium term.
Squali expects AMZN to report total revenue of $131.3 billion towards the higher end of its $127 billion - 133 billion guidance and virtually in line with the consensus of $131.5 billion.
The analyst expects North American revenue of $80.3 billion vs. consensus of $79.8 billion and notes that Truist Card data support his estimate.
He expects International revenues to accelerate to 8% Y/Y in the quarter from 1% in 1Q23 (consensus is at +9.5% Y/Y) as the region laps an easier comp (-12% Y/Y in 2Q22 vs. -6% in 1Q22) and consumer confidence improves in the EU as per European Commission Data, consumer confidence improved sequentially each month throughout the quarter. Importantly for AWS, the analyst expects revenue growth of 10% Y/Y (to $21.8 billion), in line with consensus, and vs. 16% / 20% Y/Y in 1Q23 / 4Q22 respectively, as the segment faces continued macro-related pressure as clients focus on cost containment.
Squali expects an operating income of $5.1 billion (3.8% margin) vs. management's guidance of $2 billion - $5.5 billion, slightly ahead of the consensus of $4.8 billion (3.6% margin).
Price Action: AMZN shares traded higher by 0.39% at $130.47 on the last check Friday.
