Truist analyst Youssef Squali reiterated a Buy rating on Amazon.Com Inc
Based on his tracking of a proxy for U.S. revenue growth and overall positive market trends, the analyst remained constructive on Amazon with two weeks to go in the quarter.
Squali's Truist Card Data shows that U.S. revenue is tracking ahead of the consensus of $85.0 billion and closer to $87.0 billion (+13% year-on-year), driven by improving M/M demand trends in February and so far in March.
Amid a resilient economy, he noted Amazon continues to gain share, enhancing its value proposition and launching its first-ever U.S. Big Spring Sale this week, a six-day sales event with deep discounts, which should drive incremental demand and position Amazon strongly into the first quarter's end.
On a consolidated basis, for the first quarter, Squali expected total revenues of $143.1 billion (+12.3% Y/Y), slightly ahead of the consensus of $142.6 billion (+12.0% Y/Y) and towards the high-end of management's guided range of $130 billion - 143.5 billion (8-13% Y/Y).
He expected AWS revenues of $24.5 billion (+14.5% Y/Y), implying a slight acceleration from +13.2% in the fourth quarter of 2023 and from the second and third quarters of 2023 levels of ~12% Y/Y, and in line with consensus.
Longer-term, Squali noted the ads business at Amazon is well positioned to sustain above-market growth for several years, driven by the company's massive e-commerce platform and its investments in ad tools to provide marketers with superior ROAS driven by its expertise in leveraging ML to measure and place ads.
The stock gained 81% in the last 12 months. Investors can gain exposure to the stock via SPDR Select Sector Fund - Consumer Discretionary
Price Action: AMZN shares traded higher by 0.40% at $178.66 on the last check Friday.
