Amazon's Prime Day Event 2024

As we approach Amazon's (AMZN) highly anticipated October Prime Day, analysts are revisiting their stock price targets. Recent trends at Costco suggest that consumers are returning to non-food purchases, with categories such as beauty and home goods driving growth. This shift is promising for Amazon, as Prime Day, set for October 8-9, could see a strong rise in sales. With consumers increasing their discretionary spending, Amazon is expected to benefit, especially in high-demand areas like electronics and apparel.

Holiday Season Surge

With the holiday season just around the corner, the outlook for Amazon's growth remains strong. Adobe predicts U.S. online sales will reach a staggering $240.8 billion between November 1 and December 31, 2024—an 8.4% increase from last year.

As of September 30, Amazon’s stock has risen over 24% year-to-date, outperforming the S&P 500, which is up 21.5%. Additionally, Amazon's recent return-to-office (RTO) policy, requiring employees to work from the office at least three days a week, sparked internal discussions. A recent survey revealed that 73% of Amazon employees are considering job changes after the CEO’s memo on September 16. Interestingly, the stock remains stable, possibly indicating that the RTO policy might be a cost-saving measure to reduce layoffs without affecting investor sentiment.

Amazon’s Q2 Results Fall Short, But Stock Recovers Despite Initial Setback

Amazon’s stock performance has been strong in 2024, with a year-to-date rise of over 24% by September 30, surpassing the S&P 500's 21.5% gain. However, the company faced a significant setback in early August when disappointing Q2 financials led to a nearly 9% drop in stock price. Despite this, Amazon has since bounced back.

In Q2, Amazon reported earnings of $1.26 per share, exceeding the $1.03 analysts had predicted. However, revenue came in at $147.98 billion, slightly missing the forecasted $148.56 billion. Adding to investor concerns, the company issued a cautious Q3 guidance, projecting revenue between $154 billion and $158.5 billion, with the midpoint falling below analysts' expectations.

While Amazon Web Services (AWS) grew by 19% year-over-year, it still lagged behind competitors like Microsoft and Google. On the other hand, Amazon’s advertising revenue rose 20% to $12.77 billion, though it also fell just short of projections.

Analysts Boost Amazon Stock Price Target Amid Positive Growth Outlook"

On September 30, Truist analyst Youssef Squali raised Amazon's price target from $230 to $265, reaffirming a buy rating on the stock. Squali projects that Amazon’s North American revenue will meet expectations, fueled by strong consumer demand, growing advertising revenue, faster Web Services growth, and improved operating margins. Despite heavy investments in AI, AWS, logistics, and Project Kuiper, Amazon remains a top mega-cap stock pick for Truist.

The firm also emphasizes Amazon's leadership across key sectors like e-commerce, cloud computing, AI, digital advertising, and logistics. Truist’s new price target projection has been extended from 2024 to 2025, reflecting long-term confidence in Amazon's growth.

Evercore ISI analyst Mark Mahaney similarly raised his price target to $240 from $225, maintaining an outperform rating. Mahaney highlighted Amazon's Prime Video, which is expected to generate between $3 billion and $5.9 billion by 2025, contributing 3% to 9% growth to the company's projected $56 billion in ad revenue for 2024. As of September 30, Amazon shares were trading at $186.33.

Disclaimer: The information provided in this article is for informational and educational purposes only and should not be considered financial advice. I am not a licensed financial advisor, and the views expressed herein are solely my own. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions.