On Friday, TD Cowen’s research division made headlines by adjusting its financial outlook for Amazon.com (NASDAQ: AMZN), lowering the stock’s price target from $265 to $240 while maintaining a Buy rating. Currently trading at $174.60, Amazon’s stock is significantly below the broader analyst target range of $203 to $306, raising questions about its valuation in the current market environment.
The adjustment in price target comes amid growing concerns over macroeconomic conditions that have prompted TD Cowen to revise its expectations for the e-commerce giant. Despite these challenges, the firm projects that Amazon will report solid performance for the first quarter of 2025, anticipating an 8.2% year-over-year revenue growth. This forecast aligns with consensus estimates and builds on Amazon’s impressive trailing twelve-month revenue of $638 billion, which demonstrated an 11% growth.
Key drivers of this optimistic outlook include strong performances from Amazon Web Services (AWS) and advertising revenues, which are expected to increase by 17.0% and 16.3% year-over-year, respectively. Additionally, TD Cowen predicts an operating income of $18.6 billion for the quarter, which is 6.5% higher than consensus estimates. This positive performance is attributed to the robust growth of AWS and advertising, along with a reduction in service costs. With earnings scheduled for April 24, InvestingPro subscribers can access detailed financial health scores and exclusive insights to evaluate Amazon’s performance potential.
However, the optimism for the first quarter is tempered by downward revisions for the second to fourth quarters of 2025 and the long-term period from 2026 to 2030. TD Cowen has trimmed its full-year 2025 revenue forecast by approximately 1%, with similar cuts made to projections for AWS, international, and advertising revenues. Operating income and EBITDA estimates for 2025 have also been slightly reduced by around 1%, reflecting the impact of lowered revenue expectations.
Looking further ahead, TD Cowen has decreased its revenue estimates for the years 2026 to 2030 by an average of 3.8%, with corresponding reductions in operating income and EBITDA forecasts of 3.4% and 3.7%, respectively. These adjustments indicate a more cautious long-term revenue trajectory for Amazon.
Despite the lowered estimates, the revised price target of $240 is derived from a discounted cash flow (DCF) analysis, and TD Cowen maintains a Buy rating on Amazon stock. The firm believes that the valuation remains attractive at current levels, suggesting a positive outlook for the company’s shares based on its strong fundamentals, including a healthy gross profit margin of 49% and a return on equity of 24%.
In other recent developments, Amazon has been the focus of significant news. Analysts at Goldman Sachs reiterated their Buy rating for Amazon, setting a price target of $255. This analysis comes in light of new tariffs introduced by President Trump, which could impact Amazon’s first-party eCommerce business with an estimated annualized EBIT impact ranging from $5 billion to $10 billion. Despite these potential cost increases, Amazon is expected to implement strategies such as negotiating with vendors and adjusting product prices to mitigate the effects.
Additionally, Amazon’s Project Kuiper is gearing up for a major launch, with its first full-scale batch of broadband satellites set to deploy from Cape Canaveral, marking a crucial step in providing global internet coverage. Amazon’s Wondery has also partnered with Patreon to enhance its podcast network, offering exclusive content through the platform, while its collaboration with IonQ has expanded, making the IonQ Forte Enterprise quantum computer available on Amazon Braket.
These diverse strategic initiatives highlight Amazon’s commitment to innovation and growth, even amidst challenging market conditions. As the company navigates these complexities, investors will be keenly watching its performance and strategic moves in the coming months.
