Jefferies reiterates Generac stock rating on Amazon partnership

Jefferies maintains a Buy rating and $286.00 price target on Generac Holdings (NYSE:GNRC) following an Amazon partnership. The deal includes an order worth up to $8 billion with Amazon, with an initial commitment of $2.4 billion. Amazon's market capitalization stands at $2.65 trillion, trading at a P/E ratio of 19.71. InvestingPro analysis suggests the stock is undervalued, making it one of the opportunities on their Most Undervalued list.

The partnership is expected to enhance Generac's data center business by improving backlog quality and duration, addressing investor concerns over terminal value. The agreement features Amazon warrants, aligning interests for supply beyond the initial commitment and potentially protecting margins. Jefferies estimates fiscal year 2028 implied consensus revenues for data centers could be over $1.5 billion below expectations.

Amazon recently launched a Prime Video streaming bundle on Amazon Prime Video, offering a discount of nearly 39% compared to individual subscriptions. Meanwhile, Amazon Web Services (AWS) partnered with Cognition to deploy autonomous engineering solutions, helping companies transition legacy workloads to AWS. AWS also struggled to restore access to its cloud-computing facility in Bahrain, damaged during the Iran war.

In financial matters, Amazon issued £4.25 billion in sterling notes with various maturities and interest rates, generating estimated net proceeds of £4.235 billion.