UBS Boosts Amazon Price Target Ahead of Quarterly Report

NEW YORK, NY — UBS has predictably upgraded its outlook for Amazon as the company prepares to release its third-quarter earnings report. The bank maintains a buy rating on the e-commerce giant and has increased its 12-month price target from $271 to $279 per share, suggesting a potential upside of 23% from Monday’s close.

Analyst Stephen Ju noted several revisions to his estimates, highlighting a modest increase in Amazon’s e-commerce segment driven by higher inventory levels among third-party sellers. He anticipates this will lead to improved margins, benefiting from better unit economics.

Ju also mentioned the growing potential of high-margin revenue from Prime Video as it introduces advertisements, predicting this will become a significant contributor over time. In addition, he sees opportunities for Amazon Web Services (AWS) to accelerate in growth as capacity constraints begin to ease.

The analyst indicated that Amazon’s gross merchandise value and market share might rise as the company enhances its service levels, particularly with one- and same-day Prime delivery options. “We continue to see the potential for upside across Amazon’s business segments including e-commerce, cloud, advertising, and Kuiper/low earth orbit satellites,” Ju stated.

Although Ju pointed out that the benefits from these developments have yet to be fully recognized, he remains optimistic. Despite a 3% increase in Amazon’s shares this year, he believes the stock’s relative underperformance has created a strong buying opportunity.

“With Amazon shares up only 4% year-to-date compared to its internet megacap peers, and considering the full impact of its investments in e-commerce, AWS, content, advertising, and Kuiper is still pending, we see significant upside potential,” Ju explained.

According to LSEG data, 71 out of 72 analysts covering Amazon rate the stock as a buy or strong buy, indicating broad confidence in the company’s performance.