Amazon’s (AMZN) The latest cost-cutting initiative will result in the company laying off more than 18,000 employees. Within the company’s segments, the Devices, Stores, People, Experiences and Technology (PXT) teams will all be heavily impacted by the company’s attempts to contain costs in the context of a deteriorating macro environment.
Morgan Stanley’s Brian Nowak is baffled by the extent of the cutout in some segments.
“Especially surprisingly, the bulk of the role removals will be in the store and the PXT team. A fair amount of discipline was expected from the devices/Alexa team.
In any case, Nowak believes the headcount reductions will save about $3.6 billion annually, adding 13% to the 2024 EBIT forecast. “This is an important step,” he continued.
Workforce cuts (and hiring freezes) should also have a positive impact on SBCs (stock-based compensation), which could be “significantly lower” in 2023/2024.
Aside from the grim reality of 18,000 employees losing their jobs, Nowak believes the cuts are “symbolically important” and another tech company has “been” against the backdrop of “potentially more difficult circumstances.” It shows that you are making difficult but necessary decisions about how to better manage your cash flow. 2023/2024. At the same time, the company is expected to continue investing to maintain its market-leading position.
Overall, Nowak reiterated an Overweight (i.e., Buy) rating on AMZN backed by a price target of $140. If this figure is achieved, investors can expect returns of around 56% annually from now on. (To see Nowak’s achievements, click here)
Elsewhere on Wall Street, AMZN received an additional 35 buys and was eclipsed by just 3 holds, all coalescing into a strong buy consensus rating. Hitting the average target of $137.85, the stock has 53% room for him to grow in 12 months. (See Amazon stock predictions on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly released tool that consolidates insights on all TipRanks stocks.
Disclaimer: The opinions expressed in this article are those of the featured analyst only. This content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
