Amazon stock target raised at Loop as retail business still underestimated

The price target for Amazon (NASDAQ:) shares was raised to $225 at Loop Capital on Monday, with the firm maintaining a Buy rating on the stock as AWS (Amazon Web Services) reaccelerates and the retail profit ramp is still “meaningfully underestimated.”

Loop Capital analysts updated their forecast for Amazon following what they describe as a very strong first-quarter report for both the retail and public cloud businesses.

“The retail segment delivered more than half of the profit upside driven by continued strength in services and normalization in cost-to-serve,” said the firm. “Consensus is still mis-modeling the recovery pretty meaningfully (details below) and we expect profit upside will continue for a long time before consensus catches up.”

Loop’s forecast is about 50 basis points higher than the consensus for retail segment margin in both 2024 and 2025. However, they note this is still very far from what “normal” implies in their analysis.

“AWS margin hit an all-time high, benefiting from revenue acceleration against cost controls and boosted by the accounting change on useful life of servers,” the firm added.

It was also said that Generative artificial intelligence is an exciting new growth vector that is already contributing at a multi-billion-dollar revenue run rate. Amazon remains Loop’s favorite of the mega-cap stocks in its coverage universe.