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Amazon (NASDAQ:AMZN) shares fell 1.5% Friday, modestly underperforming today’s market swoon, following a number cut by bullish analysts from JPMorgan.
The analysts, who continue to rate shares at Overweight, trimmed 2023 estimates due to AWS softness and lowered their price target to $130 from $145 – suggesting 47% upside to Thursday’s closing price.
The analysts now forecast Q4 AWS revenue growth of 21% year-over-year, which is a further deceleration from the mid-20s% growth rate into the quarter. For 2023, they now see AWS revenue growth of just 17%.
The analysts said the AWS cuts should not come as a surprise and they think buyside expectations are likely already below sellside levels. Despite the cuts, the analysts remain bullish on the cloud and AWS’ position.
“Despite N-T headwinds, we continue to view cloud as perhaps the strongest secular growth area across our coverage over a multi-year period given only ~5-15% of IT spend is in the cloud today, and AWS is extremely well positioned despite intensifying competition,” they commented.
Overall, the analysts model Q4 net sales of $143.4 billion. FY23 total revenue falls 2% to $563B and operating income falls 21% to $19.4B.
The analysts remain bullish on the stock saying the company is focused on restoring higher profitability and FCF. “After 2 years of negative FCF in 2021 and 2022, we expect FCF to inflect to positive $17B in 2023,” they added.
