On Thursday, Needham & Company reaffirmed its buy rating on Amazon (NASDAQ:) and maintained its price target at $205. The company cited a shareholder letter from CEO Andy Jassy that indicated Amazon's focus on cost-cutting measures in inbound fulfillment and inventory placement, adding that the e-commerce giant's 2024 fiscal year (FY24 ) has raised its profit forecast.
Needham maintained its sales forecast for the first quarter of 2024 at $141.5 billion, an 11% increase from the same period last year. However, the EBITDA forecast is up 12% to $28.8 billion and the earnings per share (EPS) forecast is up 20% to $0.83, indicating expected year-over-year growth of 52% and 170%, respectively.
For the full year 2024, revenue guidance remains unchanged at $636.9 billion, while EBITDA and EPS guidance increase by 10% to $132.1 billion and 12% to $4.13, respectively. This reflects expected EBITDA growth of 22% and EPS growth of 43%. For fiscal 2025, the revenue forecast is consistent at $713.4 billion, with EBITDA and EPS forecasts up 6% to $152.3 billion and 8% to $5.37, respectively.
The company also made detailed revisions to its forecast for the first quarter of 2024. The company expects net product sales of $61 billion, net services sales of $80.5 billion, operating income of $15.1 billion, an increase of 216%, and EPS of $0.83, an increase of 179%. Needham's outlook for Amazon's North American and international divisions remains unchanged, but his operating profit forecast has been revised upward to reflect a more optimistic view of the company's profitability.
The report concludes with a positive outlook for Amazon's earnings potential, and if Amazon continues to beat expectations for operating income before depreciation and amortization (OIBDA) and free cash flow (FCF), it will outperform the rest of the market. He emphasizes that there is a high possibility of performance.
