Amazon.com, Inc. (NASDAQ:AMZN) is in a strong position approaching its first quarter print for the year, due this Thursday after market close, wagers one of Wall Street’s best performing analysts. Stifel analyst Scott Devitt calls for the e-commerce king to hit the tail-end of its guide while slightly outclassing the Street, thanks to a robust holiday season, high consumer satisfaction, and rocket-fire growth for Amazon Prime. All of President’s Trumps latest attacks on Amazon and its relationship with the U.S. Postal Service and online sales tax? “Exaggerated,” dismisses Devitt, cheering that he “would take advantage of any share price weakness” ahead.
Therefore, with full confidence, the analyst maintains a Buy rating on AMZN stock with a $1,800 price target, which implies a 17% upside from current levels.
For the first quarter of 2018, the analyst anticipates Amazon can bring $50.4 billion to the table in revenue against the Street’s $49.9 billion estimate. For context, the tail-end of Amazon’s guide looks for a range between $47.75 billion to $50.75 billion.
Devitt highlights, “We expect continued topline momentum following a strong holiday season stemming from a healthy macro backdrop, record consumer sentiment levels, and the company’s expanding Prime membership base, which recently surpassed 100mm customers. Our 1Q:18/FY 2018 operating margin estimates of 1.8%/2.1% are below the Street’s forecasts of 2.0%/2.6% as the company continues to invest in logistics and emerging businesses/geographies such as devices, video content, grocery and India. Amazon is a leader in two large and rapidly growing markets, eCommerce and cloud services and remains well positioned for long term continued market share gains. We continue to support where Amazon’s investments are focused and would remain buyers on any weakness stemming from peripheral issues.”
After all, the analyst likes what he sees with an encouraging consumer environment, which is precisely why he calls for a 41% year-over-year surge in revenue. Consumer sentiment is soaring at an all-time high in the U.S. on back of recent tax cuts. Moreover, CEO Jeff Bezos underscored in his 2017 shareholder letter the Prime program boasts over 100 million paid members now- outclassing the analyst’s expectations. This kind of “healthy macro backdrop remains supportive of topline gains […]” adds Devitt. On back of the analyst’s Consumer Spending Survey, he angles the U.S. indicates a roughly 60% slice of Amazon’s Prime customer base. AWS hit a $20 billion run-rate in its fourth quarter of 2017 and the analyst calls for cloud revenue to experience 46% in year-over-year growth in the first quarter to $5.3 billion. For context, Devitt is more bullish than the Street’s estimate of $5.2 billion, especially considering AWS revenue growth has shot past both his and consensus expectations in each of the company’s past 3 quarters.
Moving forward, the analyst projects Amazon can reach 32.1% year-over-year revenue growth against the Street’s 31.3% year-over-year growth expectations. Additionally, the analyst anticipates a 2.1% operating margin for the year, under the Street’s 2.6%, which he attributes riding a wave of roughly 30% year-over-year growth from the retail segment and around 41% year-over-year from AWS- the company’s not-so-secret weapon.
Scott Devitt has a very good TipRanks score with a 73% success rate and an impressive ranking of #36 out of 4,776 analysts. Devitt realizes 25.5% in his annual returns. Investors following Devitt’s recommendations on AMZN would earn an average of 36.8% in profits on the stock.
TipRanks showcases Wall Street is essentially in the e-commerce king’s pocket when it comes to favorable sentiment that soars. Out of 39 analysts polled in the last 3 months, a whopping 38 are bullish on AMZN with only 1 playing it safe on the sidelines. With a return potential of 12%, the stock’s consensus target price stands at $1,706.08.