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 * News for Amazon
 * Amazon’s Project Kuiper Investment: A Long-Term Growth Catalyst Despite
   Initial Costs


AMAZON’S PROJECT KUIPER INVESTMENT: A LONG-TERM GROWTH CATALYST DESPITE INITIAL
COSTS




TipRanks
Aug. 26, 2024, 02:46 AM










Wells Fargo analyst Ken Gawrelski has maintained their bullish stance on AMZN
stock, giving a Buy rating on August 19.

Ken Gawrelski has given his Buy rating due to a combination of factors
surrounding Amazon’s long-term growth potential and the expected performance of
its core businesses. Even though he acknowledges the heavy upfront costs
associated with Amazon’s Project Kuiper, which aims to provide satellite
Internet services, he views these expenses as investments that will pay off in
the future. Despite a reduction in operating income forecasts for 2025 to 2027
to account for these costs, Gawrelski’s outlook remains positive, with
projections still ahead of consensus estimates, largely due to higher margins
from Amazon’s North American eCommerce and AWS operations. He recognizes the
initial impact on the company’s operating income but anticipates a breakeven
point in 2028, following the commencement of satellite launches and the
introduction of commercial services.



Gawrelski’s analysis suggests that after the initial investment phase, Project
Kuiper will demonstrate significant operating leverage with low variable costs
and high incremental operating income margins. He forecasts a positive internal
rate of return in the long term, with the expectation that subscription revenues
will offset launch costs and lead to profitability. Despite the potential lack
of synergy with Amazon’s core businesses, the analyst believes that the market
may benefit from additional clarity on the strategic rationale for the project,
which could further enhance its valuation. His assessment also takes into
account factors like potential market demand and the competitive positioning
against services like Starlink, indicating a belief in the project’s viability
and its potential to add value to Amazon’s overall business in the long run.

According to TipRanks, Gawrelski is a 4-star analyst with an average return of
7.8% and a 67.03% success rate. Gawrelski covers the Communication Services
sector, focusing on stocks such as Roblox, Meta Platforms, and Alphabet Class A.






In another report released on August 19, Morgan Stanley also reiterated a Buy
rating on the stock with a $210.00 price target.



See today’s best-performing stocks on TipRanks >>

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Amazon (AMZN) Company Description:






Amazon.com, Inc. provides online retail shopping services and also generates
revenue from cloud computing services. It operates through three business
segments: North America, International, and Amazon Web Services (AWS). The North
America and International segments include retail sales of consumer products and
subscriptions (like Amazon Prime membership fees). AWS generates revenue from
the global sales of compute, storage, database, and other service offerings.
Founded by Jeffrey P. Bezos in July 1994, the company is headquartered in
Seattle, WA.

Read More on AMZN:

 * Amazon Falls Short of Expectations and Gets Downgraded
 * DA Davidson technology analysts hold an analyst/industry conference call
 * Cruise partnership reinforces Uber’s role as demand aggregator, says BofA
 * AWS and Azure in the Spotlight for Providing AI Services to China
 * Tech companies move to old power stations to expand AI infrastructure, FT
   says




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