Amazon Stock (NASDAQ:AMZN)
In early trading on Wednesday, shares of Amazon (NASDAQ:AMZN) increased by more than 1%. However, they were off their best levels of the session. This was in response to an investment firm lowering its estimates for Amazon, citing concerns over its cloud computing unit and trends in e-commerce.
According to analyst Rohit Kulkarni, who has a buy recommendation on Amazon stock, Amazon Web Services is expected to expand between 18% and 21% year over year in 2023 and 2024. This forecast is a reduction from the analyst’s previous forecasts. However, he anticipates “moderate margin improvement” in the unit’s performance.
Kulkarni informed customers that his firm’s sales projections for 2023 and 2024 were 1% and 5% lower than those of Wall Street, respectively, while the firm’s projected operating margins were 3.6% and 5.1%, respectively, down from the Street’s 3.9% and 6.1% projections and 5.3% in 2021. “We are pleased by recent steps to reduce costs and personnel. These actions assist in aligning cost structures with current demand levels and may lead to above-trend margin improvement if the economic environment improves,” the company said.
Kulkarni also said that retail margins in North America would be “break-even” in 2023. However, overseas retail margins will continue to be low-single-digit negative in 2023, with the possibility for an additional decrease.
In connection with the reduction in estimates, Kulkarni also reduced his per-share price objective on Amazon stock, bringing it down from $145 to $125.
Morgan Stanley analyst Morgan Nowak provided an overall favorable view of Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) and Amazon stock earlier this month. However, he cautioned that both businesses might suffer reduced profitability owing to increasing expenses.
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