- Needham analyst Laura Martin reiterated Buy on Amazon.com Inc (NASDAQ:AMZN) with a $120 price target.
- Martin believed that AMZN’s economic model has problems created by itself.
- The analyst held the FY22 revenue estimate constant at $510 billion. Yet, costs will represent nearly $500 billion in FY22, so the Operating Income for 1 million employees for an entire year of work will be about $11 billion (2% operating margin) in FY22.
- At $510 billion of annual revenue, AMZN has scale. Investors also want AMZN to demonstrate upside pricing power in 2023 since cost-cutting has limits to driving valuation upside.
- For 4Q22, the analyst estimated Total Net Sales of $144.9 billion (up 5% Y/Y) and EPS of $0.13 (down 91% Y/Y).
- Martin estimates Net Product Sales of $72.5 billion (up 2% Y/Y) and Net Service Sales of $72.4 billion (up 10% Y/Y).
- The analyst saw AWS sales of $21.3 billion (up 20% Y/Y), advertising revenue of $10.7 billion (up 10% Y/Y), and 3rd Party Seller revenue of $31.8 billion (up 5% Y/Y).
- For FY23, the analyst estimates Total Net Sales of $564 billion (up 11% Y/Y and 5% below the analyst’s previous estimate) and EPS of $1.85 (up over FY22E EPS Loss of $0.16 and 15% below the analyst’s previous estimate).
- FY24 Martin introduced estimates for FY24 of Total Net Sales of $645.1 billion (up 14% Y/Y) and EPS of $2.92 (up 58% Y/Y).
- Price Action: AMZN shares traded lower by 4.59% at $82.79 on the last check Thursday.
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