Amazon’s stock is getting a boost from a bullish analyst at BofA Securities, Justin Post. Post maintains a Buy rating on the e-commerce giant, with a price target of $210. He sees significant growth potential driven by CEO Andy Jassy’s ambitious restructuring plans.
Jassy’s vision for a leaner Amazon, to be fully realized by the first quarter of 2025, is expected to yield significant cost savings. Post estimates $700 million in annual savings from streamlining operations, including a reduction in management layers and a shift to a five-day-a-week in-office policy. This restructuring will see a portion of management roles transitioning to individual contributor positions, with an estimated 7,000 employees potentially making this shift.
Further fueling Post’s optimism is Amazon Web Services (AWS)’s strategic partnership with Intel to develop custom AI chips. This partnership will significantly enhance AWS’s competitive edge in the rapidly expanding AI market, with Intel’s chips proving to be more cost-effective than existing alternatives. Post believes AWS’s diverse and growing product offerings position it to capture a substantial share of the burgeoning AI customer demand.
Post’s price target is based on a meticulous sum-of-the-parts (SOTP) analysis, which values Amazon’s various business segments individually. The 1P retail business is valued at 1.2 times 2025E Revenue, the 3P retail business at 3.0 times 2025E Revenue, AWS at 8.0 times 2025 Sales, and the advertising business at 5.0 times 2025 Sales.
While acknowledging the potential risks associated with regulatory scrutiny, Post believes Amazon’s growth prospects justify a discount to comparable companies. Despite the discounts, Post’s multiples remain optimistic, reflecting his confidence in Amazon’s ability to maintain strong growth in the years to come.
As of Tuesday, AMZN stock closed at $187.15, reflecting a 1.22% increase.
