Set to release fourth-quarter earnings later this week, Amazon (AMZN) is looking to woo investors back to its stock after a poor showing at the end of 2018. Shares plummeted 30% at the end of 2018, as a result of disappointing third-quarter results, as well as negative macro events, including US political uncertainty and trade tension between the US and China.
Though Amazon is the clear leader in e-commerce, the company has shown itself to be a leader in other products and industries, including web advertising and web services (cloud). Amazon’s AWS is a profit-making machine, which allows it to undercut e-commerce competitors on price and offer features many cannot. Its advertising and search business is quickly growing and rival that of Google — at least when it comes to product search. These, among other reasons, contribute to top analyst Brian White’s Buy rating, along with a $2,300 price target.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian White has a yearly average return of 20% and a 68% success rate. White is ranked #35 out of 5,129 analysts.
Overall, White expects Amazon to “at least meet” his 4Q:18 revenue estimate of $70.93 billion and “slightly exceed…EPS projection of $5.72.” He says that “AWS [will] lead and International [will] lag,” as he expects international e-commerce sales to increase only 5% to $18.97 billion. The analyst says he expects “AWS to deliver the fastest segment growth rate with sales up 41% YoY in 4Q:18 to $7.21 billion.”
On AWS, White says “momentum in the cloud was experienced across our universe in the latter part of 2018, a trend we expect to continue into 2019.” The analyst believes this will serve as a boon to the segment, but also cites “a plethora of new cloud innovations…including 13 new machine learning services, new database capabilities, AWS Outposts, Amazon Managed Blockchain, AWS RoboMaker and more,” which will help entice new customers to sign up and retain existing customers.
No analysis on Amazon would be complete without discussing its core North American ecommerce segment. White says, “spending in the U.S. over the holiday season (11/1-12/24) appears to have been healthy with Mastercard SpendingPulse estimating U.S. retail sales grew by 5.1% (the highest growth in six years) with online shopping growing by 19.1%.” As Amazon is the nation’s largest e-commerce retailer, White is bullish on this segment’s results.
Wall Street loves Amazon. TipRanks tracking of 28 analyst ratings on the company shows a consensus Strong Buy, with all 28 analysts recommending Buy. The average price target is $2,132.88, representing a 32% upside from current levels. The most confident analyst goes as high as $2,500 – the lowest price target is still $280 higher than its current value. (See AMZN’s price targets and analyst ratings on TipRanks)