Telsey Advisory Group analyst Joseph Feldman reiterated the Outperform rating on Amazon.Com, Inc. (NASDAQ:AMZN), with an unchanged price forecast of $200.

Amazon will report its first quarter of 2024 earnings after the markets close on Tuesday, April 30. 

Feldman projects continued double-digit sales and profit growth in the quarter to be reported, reflecting the strength of online spending, gains from expanded merchandise and faster fulfillment, and stabilization (and growth) of AWS.

According to the analyst, greater focus on profits will be supported by the growth of higher margin categories and services, such as advertising, media, and AWS (partly helped by AI-related upgrades).

In addition, the redesigned distribution network (eight separate regions serving smaller geographic areas vs. a centralized approach previously), and cost savings will also boost profits.

Amazon should continue to gain market share by leveraging its sticky Prime member base, small business relationships, and technological edge, the analyst adds.

The analyst projects first-quarter sales growth of 12.4% to $143.2 billion versus the FactSet consensus of $142.6 billion.

Feldman forecasts first quarter operating income of $11.1 billion versus FactSet at $11.0 billion.

Overall, Amazon should continue to benefit from faster growth of higher margin businesses, such as advertising and media, as well as gains from productivity initiatives, partly offset by the ongoing investments in strategic initiatives, e.g., the expansion of Prime benefits in foreign markets. Solid expense control should help as well, Feldman adds.

Price Action: AMZN shares are trading lower by 2.66% to $171.90 at last check Thursday. 

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