Investors and analysts alike have their eyes on Amazon (AMZN) stock as we enter the holiday season, but black Friday metrics can already be reviewed. We’re just under a month away from Christmas, but who’s counting? Actually Suntrust’s top analyst Youssef Squali is. He says out of all e-commerce companies, Amazon did particularly well during this year’s Black Friday/Thanksgiving spending spree. In turn, Amazon’s stock rose more than 3% over the weekend (nearly $50)– and is still rising. Let’s look at the metrics.
2018 online shopping for Black Friday and Thanksgiving day were up by 25% year-over-year with a record of $9.9 billion. Squali used Adobe metrics to estimate Thanksgiving day sales, which he thought would be $3.35 billion and were actually $3.7 billion, showing a 27.9% YoY increase, while YoY projections were just 16.5%. Black Friday estimates were $5.9 billion but actual sales came in at $6.2, showing an increase of 23.6% YoY. Black Friday YoY projections were only 17.2%. Estimates for Small-Business Saturday are $3.0 billion, Super Sunday for $3.4 billion and Cyber Monday $7.8 billion. We’ll find out how much actual sales were in the coming days.
“Strong macro economic backdrop, higher consumer sentiment and mobile are major drivers of growth. Cyber Monday (today) is expected to be a record $7.8B day (Adobe). There are 29 days till Christmas, but the trend so far bodes well,” Squali says.
“Looked at over a longer window, consumer spending for the Nov. 1-Nov. 23rd amounted to $44.2B, up 19.1% over last year’s $37.1B, and compares favorably to expectations of $43.0B (Adobe). Visa estimates that holiday shopping spending over the NovDec time frame will be up 17% Y/Y vs. 14.8% for Adobe.”
The numbers look promising, leading Squali to reiterate a Buy rating and a price target of $2,250.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Youssef Squali has a yearly average return of 17.6% and a 63% success rate. Squali has a 35.6% average return when recommending AMZN, and is ranked #65 out of 5,129 analysts.
Amazon Web Services to Host Event Tuesday
Amazon has other projects up ahead, including a trip to Las Vegas Tuesday for an Amazon Web Services cloud industry event called reInvent, that is expected to have more than 40,000 guests. The following morning will have partner sessions and a formal keynote address from Andy Jassy, the CEO of AWS. KeyBanc’s top analyst Brent Bracelin is looking forward to the AWS conference.
“The secular shift to cloud remains one of the most prolific growth drivers within technology, and AWS reInvent provides an annual barometer for the pace of change across this trillion-dollar transformation. Recall, it took ten years for AWS revenue to climb above $10B (2006-2016), while the next incremental $10B took only two years (2016-2018). Moreover, 2019 could mark the first year AWS adds an incremental $10B within a single year as cloud and digital transformation becomes a mainstream phenomena driving AWS revenue to $35B+ and operating profits above $10B for the first time,” Bracelin said.
The analyst estimates that in the next three years, AWS revenue could double to $56 billion or more from $25 billion this year: “Even at that scale, this would assume AWS might capture just 4% share of a trillion-dollar market leaving ample room for IaaS alternative platforms like Microsoft Azure and Google Cloud to also sustain high-growth at scale. Bottom line, AWS is likely to remain a bright spot within the broad Amazon product portfolio from both a revenue growth and profitability perspective during a cloud-first era,” Braceline concluded.
5-star analyst Brent Braceline has a yearly average return of 17.3% and a 66% success rate. Braceline has a 35% average return when recommending AMZN, and is ranked #32 out of 5,129 analysts.
Other analysts on Wall Street are excited about AMZN as well. The consensus rating shows it’s a Strong Buy and has a price target of $2,165, showing an upside of about 44%. TipRanks finds that out of 37 analysts, there’s only one who is sidelined on the stock, while the rest are bullish. (See AMZN’s price targets and analyst ratings on TipRanks)