As Amazon (AMZN) stock looks unstoppable, many investors are wondering if the party can go on. In about a week, Wall Street will have some clarity as the e-commerce giant reports second-quarter earnings.
Amazon has guided for Q2 revenue in the range of $59.5 – 63.5 billion (a rise of 12.5% to 20% compared to last year), with analysts expecting $62.5 billion, or 18.1% rise. On the EPS side, Amazon has reported $5.07 this quarter last year, while analysts are expecting $5.58 this year. Overall, growth will continue to be fueled by e-commerce and AWS, but also rising segments, including advertising and 3PL services.
Ahead of the print, Monness analyst Brian White is reiterating a Buy rating on AMZN stock and $2,300 price target, which implies nearly 17% upside from current levels.
As always, we like to give credit where credit is due. According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, White has a yearly average return of 27.4% and a 76% success rate. White has an average return of 11.6% when recommending Amazon and is ranked #11 out of 12,087 experts. (To view White’s stocks list, click here)
White believes “Amazon will meet [his] 2Q:19 revenue estimate of $62.56 billion (up 18% YoY) and slightly exceed…EPS projection of $5.63.” The analyst expects a 5% increase in revenue since Q1, which is “slightly above the four-year average increase of 4% for past June quarters.”
The analyst also expects AWS to be show continued momentum. The analyst says AWS will “deliver the fastest segment growth rate with 2Q:19 sales rising 39% YoY to $8.50 billion,” as it continues to be the strongest profit source for the company. Meanwhile, White anticipates advertising to “remain a profitability swing factor,” and calls it “a positive surprise.”
One of the things investors love about Amazon is that it continues to reach different markets and add new value-add features to e-commerce. Recently, the company said it would make Prime even more appealing, by replacing two-day shipping with one-day. As a result of strong profit from AWS, logistics and advertising, Amazon is able to provide services without risking going into negative territory. Aside from that, Amazon continues to play a part of people’s lives. For example, its Alexa line of devices are increasing in their capabilities, while its music streaming service is also growing.
All in all, as the company gears up to announce earnings, most analysts on Wall Streets are out rooting for this retail titan to be a winning stock pick. TipRanks analysis of 36 analyst ratings shows a Strong Buy consensus, with 35 analysts recommending Buy and only one suggests Hold. The average price target among these analysts stands at $2,269, which represents about 15% upside from current levels. (See AMZN’s price targets and analyst ratings on TipRanks)