Sell-Side Analysts Reiterate Bullish Stance on, Inc. (AMZN), Cautious on Nokia Corp (ADR) (NOK)

On back of, Inc. (NASDAQ:AMZN) and Nokia Corp (ADR) (NYSE:NOK) releasing fourth-quarter earnings on Thursday, analysts from William Blair and BMO are chiming in with divided perspectives. While one analyst maintains long-term confidence in Amazon’s stock despite a sales miss $1 billion short of meeting consensus expectations, another analyst does not budge from the sidelines even after a largely solid quarterly print delivery from Nokia. Let’s take a closer look:

Amazon Remains King of Cloud and Retail Industries as Markets Expand 

After market close on February 2nd, Amazon posted a mixed fourth-quarter print that sent shares falling close to 4% Friday. However, when looking beyond the sales miss, William Blair analyst Ryan Domyancic remains confident in the online and e-commerce leader’s potential to capture growing markets between cloud and retail.

Therefore, the analyst reiterates an Outperform rating on shares of AMZN without listing a price target.

For the fourth quarter, Amazon posted $43.7 billion in sales, which though indicates a 22% year-over-year rise, simultaneously registered $1 billion under consensus expectations. However, AMZN’s pro forma operating margin of 5.0% topped consensus by 60 basis points. From Domyancic’s eyes, he points to foreign exchange rate movements for the sales miss. For the first quarter of 2017, AMZN’s management team guided sales growth to a range of 14% to 23%, just shy of consensus’ projection of 24%. Meanwhile, the GAAP operating income guidance high end of $900 million underperformed consensus’ estimate of $1.3 billion.

Nonetheless, the analyst remains undeterred in his bullish perspective, noting that even with the miss, Amazon Web Services (AWS) brought in a robust performance this quarter, surging 47% year-over-year.

Domyancic continues, “Further, the Street may have been slightly aggressive on AWS sales growth following price cuts that took effect December 1. In the retail business, paid unit growth decelerated to 24% in the fourth quarter, from 28% in the third quarter. We found the size of the deceleration surprising given that we perceive there to be a number of tailwinds to unit growth, including international Prime adoption and Prime Now. We would look for the paid unit growth to stabilize or reaccelerate in the first half of 2017.”

“Looking ahead, we believe Amazon clearly messaged through its first-quarter guidance and comments that it will aggressively invest in 2017. It called out ongoing investments in fulfillment centers, digital video content, Prime Now, Amazon Fresh, Alexa, and India. We reiterate our Outperform rating on Amazon. We believe its cloud computing business and retail business are addressing large markets and we expect each will continue to grow as its addressable markets expand,” Domyancic contends.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, three-star analyst Ryan Domyancic is ranked #2,065 out of 4,373 analysts. Domyancic has an 83% success rate and realizes 8.0% in his yearly returns. When recommending AMZN, Domyancic yields 6.9% in average profits on the stock.

TipRanks analytics exhibit AMZN as a Strong Buy. Based on 30 analysts polled by TipRanks in the last 3 months, 28 rate a Buy on AMZN stock while 2 maintain a Hold. The 12-month average price target stands at $936.61, marking a nearly 16% upside from where the shares last closed.

Nokia Has Made Positive Strides Forward- But Not Enough Just Yet 

Nokia’s performance in its fourth quarter, with results revealed February 2nd before market open, revealed the telecom giant’s improved margins and declining taxes came in strong, helping to offset a dip in sales. However, though BMO analyst Tim Long appreciates the “better quarter” with “mostly positive results,” he remains sidelined on the “challenges [that] remain.”

As such, on the heels of fourth-quarter earnings, the analyst reiterates a Market Perform rating on NOK while boosting the price target from $4 to $5, which represents a just under 4% increase from where the stock is currently trading.

For the fourth quarter, NOK posted €6.7 billion in revenue and €0.12 in EPS. Though revenue hit just under consensus and Long’s projection of €6.8 billion, EPS outclassed his estimate of €0.05 as well as the Street’s forecast of €0.07. Comparable sales saw a 13% year-over-year decline. While gross margin of 42.0% reached ahead of the analyst’s estimate calling for 38.9%, opex was “a touch lower.”

Long adds, “Networks performance in the quarter was weak, with revenue of €6.1 billion below our/consensus estimate of €6.3 billion/€6.2 billion, but operating margin was better on synergies getting pulled in from 2017 and lower incentive accruals.” Accordingly, the analyst lifts EPS estimates from €0.19 to €0.23 and he sets a new 2018 EPS forecast of €0.27.

For the full year of 2017, NOK management projects an 8% to 10% operating margin for Networks. From the analyst’s standpoint, this is reasonably achievable, as he elaborates, “We do not view this target as particularly aggressive, and believe the company can hit the high end of that range, even with continued revenue declines. For Technologies, management is maintaining the €800 million licensing baseline. We believe it will be difficult to grow this portion of the business, given the legal battles with Apple and the challenge of licensing Chinese vendors, whose market share continues to rise.”

Ultimately, “Management is cautious on 2017, and its view of moderating revenue declines is in line with our Global Infrastructure Model. We like the progress on the €1.2 billion savings program but do not see any near-term catalysts to move the stock, with 5G still on the distant horizon,” Long surmises.

According to TipRanks, four-star analyst Tim Long is ranked #465 out of 4,373 analysts. Long has a 61% success rate and earns 8.8% in his annual returns. However, when suggesting NOK, Long loses 38.3% in average profits on the stock.

TipRanks analytics demonstrate NOK as a Buy. Out of 9 analysts polled by TipRanks in the last 3 months, 4 are bullish on Nokia stock and 5 remain sidelined. With a return potential of 4%, the stock’s consensus target price stands at $5.03.

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