Morgan Stanley still sees tactical risk to Q4 EBIT guidance as Amazon invests to drive its faster-growing, lower-margin essentials business through a competitive holiday, but would be buyers on any weakness into 2025 as the firm has detailed how Amazon will make these items profitable. The firm’s cost to serve drivers “still paint a path” to $8-$9 of 2026 free cash flow and Amazon management’s recent letter regarding flatter, leaner, and faster teams as soon as Q1 of 2025 could lead to an incremental $2B-$4B of savings and 3%-5% to 2025 EBIT, the analyst tells investors. The firm maintains an Overweight rating and $210 price target on Amazon shares.
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