Jeff Bezos’ surprise move to step down as chief executive of Amazon.com Inc quashed Wall Street optimism about bumper quarterly results, but analysts were upbeat on the promotion of its cloud computing head to the top job.
Andy Jassy has long been considered a strong contender for the top job since Amazon.com Inc created two CEO roles in 2016 reporting to Bezos, the other held by recently retired consumer CEO Jeff Wilke.
However, few were expecting Bezos to step down when the company on Tuesday reported sales above $100 billion for the first time in a hugely successful year delivering goods in the coronavirus pandemic.
“We expect Amazon’s equity to trade higher ... but expect a more tempered response given the change in CEO,” Citigroup analysts wrote in a research note.
Shares of the company, which gained about 76% in 2020, were up marginally on Wednesday morning at $3,444. They rose 8% since mid-January in the run-up to the results.
“The upside to the stock price is limited given the performance into the numbers and given what’s coming in the next 3-6 months - the vaccine rollouts,” said Keith Temperton, an equity sales trader at Forte Securities.
“Amazon model might be seen as starting to get a little bit expensive, given that people might start thinking about actually leaving their houses.”
At least 17 brokerages raised their price target on Amazon and 46 brokerages have a “buy” or higher rating on the stock, according to data from Refinitiv Eikon.
Jassy, 53, joined Amazon in 1997 after Harvard Business School, founding Amazon Web Services, known as AWS, and growing it to a cloud platform used by millions of customers.
Analysts noted that Bezos, now among the world’s richest men after starting Amazon as an internet bookseller in a garage 27 years ago, had already stepped back from much of the company’s day-to-day operations.
J.P.Morgan analyst Doug Anmuth dismissed some concerns around Jassy’s lack of experience in retail, saying that Jassy would continue Bezos’ same core values and beliefs given similar operating cultures between the consumer and AWS businesses.
“As part of Amazon’s S-team for years, Jassy has still been close to the Consumer business in which he originally started at Amazon,” Anmuth said.
This article originally appeared on Reuters.
