On Thursday, Needham & Company reaffirmed its buy rating on Amazon (NASDAQ:AMZN) and maintained its price target on the stock at $205. The firm has increased its profit estimates for the e-commerce giant for fiscal year 2024 (FY24), citing a shareholder letter from CEO Andy Jassy, which indicated a focus on cost-cutting measures in Amazon's inbound fulfillment and inventory placement.
Needham has maintained its first-quarter revenue estimate for 2024 at $141.5 billion, representing an 11% year-over-year increase. However, it has increased its EBITDA estimate by 12% to $28.8 billion and its earnings per share (EPS) estimate by 20% to $0.83, indicating expected growth of 52% and 170% year-over-year, respectively.
For the full fiscal year 2024, while revenue estimates remain unchanged at $636.9 billion, EBITDA and EPS estimates have been raised by 10% to $132.1 billion and by 12% to $4.13, respectively. This reflects anticipated year-over-year increases of 22% for EBITDA and 43% for EPS. Looking ahead to fiscal year 2025, revenue estimates are consistent at $713.4 billion, with EBITDA and EPS estimates raised by 6% to $152.3 billion and by 8% to $5.37, respectively.
The firm has also provided detailed revisions for its first-quarter 2024 estimates. It expects Net Product Sales to be $61 billion and Net Service Sales to be $80.5 billion, with an impressive 216% increase in Income from Operations to $15.1 billion and a 179% rise in EPS to $0.83. Needham's outlook for Amazon's North America and International segments remains the same, but estimates for Operating Income have been adjusted upward, reflecting a more optimistic view of the company's profitability.
The report concludes with a positive outlook on Amazon's performance potential, emphasizing that if Amazon continues to surpass its Operating Income Before Depreciation and Amortization (OIBDA) and Free Cash Flow (FCF) estimates, it is likely to outperform other stocks in the market.