As Amazon (NASDAQ:AMZN) readies to dish up its first quarter print of the year, one of Wall Street’s best performing analysts, one of Wall Street’s top analysts, sees that Facebook’s Cambridge Analytica data privacy scandal has caused a poor chain reaction- one that has fired up apprehensions holding this stock back from how high it could soar. Brian White at Monness Crespi notes that on top of FB’s bad “scare,” attacks over at the White House from President Donald Trump certainly haven’t helped.
Expecting the Street to shift the spotlight over to stellar fundamentals, the analyst reiterates a Buy rating on AMZN stock with a $2,000 price target in his positive earnings preview, angling for a close to 31% upside from current levels.
“If not for the increased concerns around data privacy in the aftermath of the Cambridge Analytica scandal with Facebook […] that came to light last month, combined with a White House that is very publicly hanging a dark cloud of suspicion over Amazon’s business practices (e.g., taxes, taking advantage of USPS, etc.), we believe Amazon’s stock would be smartly higher from current levels. Looking forward, we believe the investors will again focus on fundamental trends and last week’s announcement that Amazon already had over 100 million paid Prime members is a move in the right direction,” explains White, who contends this Thursday’s print “will provide the necessary catalyst for the stock to head higher.”
Taking under account that the first quarter of the year is often the least strong revenue of the year based on seasonal trends, the analyst nonetheless anticipates more robust than the usual seasonality seen throughout the last four years from Amazon. White forecasts slight upside to his revenue projection of $49.48 billion, marking a 39% year-over-year rise, and EPS of $1.11. For context, the Street looks for $49.87 billion in revenue from AMZN and $1.27 in EPS.
“Strong cloud trends in early 2018 to benefit the #1 Cloud,” writes the analyst. White estimates Amazon Web Services (AWS) will unleash its most rapid-fire segment growth rate in its first quarter showcase with a 47% year-over-year rise in sales to $5.39 billion; 42% year-over-year jump in North America to $29.84 billion; and a 29% lift in year-over-year growth to $14.25 billion. From where the analyst is standing, cloud coverage took off like a rocket this year, surprising him with strength that surpasses this time early last year, leading him to model for AWS to follow suit.
Meanwhile, “Alexa shows momentum and ring now part of ecosystem,” continues White, asserting: “The reach of Alexa continues to grow, with Amazon citing over 4,000 smart devices across 1,200 unique brands with the voice service integrated inside.” Notably, AMZN bought out Ring in the first quarter, the company that brought Ring Video Doorbell and Spotlight Cam to the market, at a price Bloomberg wagers circles $1 billion.
Glancing ahead, the analyst looks for a 37% year-over-year climb in sales to $51.91 billion against the Street’s $52.20 billion and EPS of $1.48, more bullish than the Street’s $1.46. Though White House “skepticism” hovers overhead and the fallout of Facebook’s data privacy debacle continues to settle, the analyst ultimately believes strong fundamentals are good reason to keep betting on this giant.
Brian White has a very good TipRanks score with a 68% success rate and a high ranking of #74 out of 4,783 analysts. White yields 15.9% in his annual returns. Investors who follow White’s recommendation on AMN will realize 7.0% in average profits on the stock.
This e-commerce king is a Wall Street favorite, according to TipRanks analytics. Out of 39 analysts polled in the last 3 months, an impressive number rate a Buy on AMZN stock- 38. Only 1 analyst plays it safe, maintaining a Hold on the stock. With a solid return potential of nearly 12%, the stock’s consensus target price stands at $1,706.08.