Amazon's Steady Climb: Microsoft's Better than Feared Cloud Results Sets Momentum For Amazon Ahead Of Q1, Analyst Says

Benchmark analyst Daniel L. Kurnos reiterates a Buy rating on Amazon.Com Inc AMZN with a price target of $130.00.

Shares of Amazon have steadily rallied since bottoming in early January despite a disappointing 4Q result in the same month. 

Optimism grew further in April when CEO Andy Jassy finally made significant headway in the expense department. Retail metrics also pointed to a potentially solid start to the year, defying the broader doom and gloom sentiment. 

Also, the analyst suspects, like other significantly discounted historical must-owns, investors likely want to own the name again once the company appears firmly back on the right track. 

The analyst is in line with consensus almost across the board and for all metrics heading into the 1Q print tomorrow night, which gives confidence in a positive outcome. 

Other than perhaps a bit of optimism on 3P seller services, a recent area of strength, he thinks the bar seems achievable for the categories that matter most in Online Stores, Advertising, and AWS. 

Microsoft Corp MSFT cloud results appeared to come in better than feared. However, Amazon has already called out several near-term headwinds that could limit any immediate upside to that highly watched segment. 

Still, as long as the profit centers perform as expected, it should give Amazon the platform to start beating on op income both in the quarter and on the 2Q guide. 

However, the analyst is somewhat cautious about the flow through to free cash flow, given ongoing cloud investment, platform investment, and content investment that could depress near-term results.

On the plus side, despite some aggressive cost actions, the street does not appear to be projecting any significant operating improvement in 2023.

Price Action: AMZN shares traded higher by 2.38% at $105.00 on the last check Wednesday.

Photo by Tony Webster via Flickr