Is AMZN stock undervalued? (July, 2024)

Ahead of its annual Prime Day, Roth MKM analyst Rohit Kulkarni has maintained his “Buy” rating on Amazon (Amazon Stock Quote, Chart, News, Analysts, Financials NASDAQ:AMZN).

“We hosted an expert webinar with a 20-year veteran in e-commerce,” the analyst explained. “We discussed a variety of topics involving Amazon, including Ads, Wal-Mart (WMT–Buy, Kirk), Shopify (SHOP–Buy, Aftahi), and Temu/Shein. The speaker noted 2Q trends either met or exceeded seller expectations, and felt optimistic about Prime Day growth accelerating vs. 2023. Webinar zoom replay, speaker slide deck, and transcript are available to clients upon request.”

The analyst said his takeaways from the webinar are that the trends for the second quarter are generally better than expected, that Prime Day will see growth, that marketplaces such as Temu, Tik-Tok and WalMart are on the rise, and that Amazon ads in the offering that is sparking the most excitement.

In a research update to clients July 9, Kulkarni maintained his “Buy” rating and price target of $210.00 on AMZN.

The analyst thinks AMZN will post EPS of $4.48 on revenue of $630.1-billion in fiscal 2024. He expects those numbers will improve to EPS of $5.49 on revenue of $687.7-million in fiscal 2025.

“Our sum-of-parts valuation implies $2.25tn market cap ($820bn for Retail, $1,050bn for AWS, and $430bn for Advertising/Other), and our $210 PT implies approx. 15x ‘25E EBITDA. We believe this methodology appropriately attributes value across Amazon’s three business segments with different growth and margin profiles,” Kulkarni concluded.