AMZN stock is still undervalued, Roth says

The stock has been on a tear for most of 2023, But Roth MKM analyst Rohit Kulkarni thinks there is still money to be made on Amazon (Amazon Stock Quote, Chart, News, Analysts, Financials Nasdaq:AMZN).

After taking a deep dive into Amazon Web Services twelfth annual re:Invent conference in Las Vegas, the analyst said he came away convinced that AMZN is the best “mega cap” tech stock right now.

“We watched 25+ hours worth of keynotes at AWS Re:Invent. AWS sessions tend to have more educational material than Azure & GCP,” he explained. “If you are looking for weekend reading material, we can share 200+ slide grabs from all keynotes. AWS did not overdo the AI buzzword bingo, however, it provided anecdotes, testimonials and launched new products to support the following: “We created Internet’s Tech stack with Cloud. We are best positioned to create the AI Tech Stack.” Mega Cap Picks Order: #1. AMZN, #2. META, #3. GOOGL.”

In a research update to clients December 1, The analyst maintained his “Buy” rating and 12-month price target of $165.00 on Amazon.

Kulkarni thinks Amazon to generate EPS of $2.64 on revenue of $571.4-billion in fiscal 2023. He expects those numbers to improve to EPS of $3.44 on a topline of $623.9-billion the following year.

“Our sum-of-parts valuation implies $1.59tn market cap ($680bn for Retail, $690bn for AWS, and $300bn for Advertising/Other), and our PT implies approx. 15x ‘24E EBITDA. We believe this methodology appropriately attributes value across Amazon’s three business segments with different growth and margin profiles,” Kulkarni concluded.