Evercore Raises Amazon Stock Target Due to Prime Video Opportunity

Evercore ISI has raised its price target for Amazon.com shares from $225 to $240 while maintaining an Outperform rating.

This updated target is based on a 35x multiple of the firm’s projected earnings per share (EPS) of approximately $7.00 for 2026, as well as a 25x multiple of its anticipated free cash flow (FCF) of around $100 billion for the same year.

Analysts at Evercore have identified Amazon as their top choice among large-cap stocks, highlighting the company’s renewed focus on its Prime Video platform and the associated opportunities.

The investment bank notes that Amazon has enhanced its Prime Video offerings by securing rights to more NFL games, a WildCard Playoff game, 66 NBA games in the upcoming 2025 season, and the 2024 PPA World Championships. The company is emphasizing the monetization of this content through advertising. During the second-quarter earnings call, CEO Andy Jassy indicated that their advertising business, which has reached a $50 billion revenue run rate, was a primary topic of discussion following Amazon Web Services (AWS).

Jassy also mentioned Amazon’s initial involvement in the Upfronts and stated that they are “at the very beginning of what’s possible in our video advertising.”

Additionally, Evercore analysts have revised their monetization estimates for Amazon Prime Video, developing a model to forecast potential revenue and profit scenarios from both advertising and subscription models.

The analysis suggests that Prime Video could generate between $3.0 billion and $5.9 billion in total revenue by 2025, contributing an additional 3% to 9% to the firm’s 2024 advertising revenue estimate of $56 billion for Amazon. This could lead to a growth acceleration in advertising revenue to 20% in 2025, following a 19% increase in 2024.

Furthermore, Evercore ISI anticipates that the Prime Video platform could contribute between $1.8 billion and $3.3 billion in operating income by 2025, representing an incremental 3% to 5% increase to the firm’s total operating income estimate of $61 billion for Amazon in 2024.

The analysts remarked that the ramp-up in Prime Video monetization is expected to support ongoing expansion in operating margins into 2025 and beyond.