Wells Fargo added Amazon (NASDAQ:AMZN) to its second quarter 2024 Tactical Ideas List in a note Monday previewing the company's first-quarter results. The firm maintained an Overweight rating on the stock, raising the price target to $217 from $211.
The firm sees a beat and raise for Amazon, likely driven by the new Fulfillment by Amazon (FBA) fee structure and healthy trends.
Wells Fargo believes restructured FBA fees and cost externalization driven by FBA inventory placement fees will drive $1.2 billion of incremental OI vs. 1Q24.
'In addition to the FBA fee change, we expect retail and AWS q/q rev growth to contribute $725M and $350M (10% & 31% q/q inc. margin) of incremental OI vs. 1Q. Accordingly, we raise 2Q OI by ~$750M (6%) to $14.5B (15% above Street)," said the firm.
Wells Fargo notes that its AWS checks point to continued first-quarter acceleration driven by "significantly moderating optimization, cloud migration acceleration, and GenAI workloads."