Jon Hadad

About the Author Jon Hadad

Jon Hadad graduated from the University of Delaware with a degree in political science. Prior to joining the Smarter Analyst team, he was an industry analyst at a New York research firm.

With Two Days to Go Before Amazon (AMZN) Earnings, this Top Analyst Weighs in on the Stock


With its first-quarter earnings report due out this Thursday, will Amazon (AMZN) stock go even higher from here?

While many of Amazon’s recent earnings calls preceded surges to the stock price, its Q1 guidance was a little more conservative than normal, resulting in less excitement-than-normal for the upcoming release. Amazon expects revenue between $56 and $60 billion ($51 billion in Q1 last year), with operating income growing between 21% and 74% since this time last year. While still strong, nothing compared to 2018 FY growth of 203%. Nevertheless, Amazon’s stock is still up 28% year-to-date, and more than 95% of Wall Street analysts covering the company rate the shares Buy.

Two days before the earnings announcement, Monness’ top analyst Brian White maintains his Buy rating on Amazon stock with $2,300 price target, which implies nearly 20% upside from current levels. 

As always, we like to give credit where credit is due. According to TipRanks, White has a yearly average return of 25.1% and a 76% success rate. White has an average return of 6.9% when recommending Facebook and is ranked #19 out of 5,192 analysts.

 

Jeff Bezos Is Leading Amazon (AMZN) in the Right Direction

 

White expects Amazon “will at least meet our 1Q:19 revenue estimate of $58.47 billion (up 15% YoY; Street is at $59.65 billion) and beat our EPS projection of $4.27 (Street is at $4.72).” His “1Q:19 revenue estimate reflects a 19% QoQ decrease, inline with the four-year average decline for past March quarters.”

While North America still remains Amazon’s largest segment, with White “modeling 13% YoY sales growth…to $34.86 billion in 1Q:19,” the largest growths are expected from advertising and AWS. The analyst says, “strength in advertising revenue was a positive surprise in 2018 and we anticipate this business will remain a swing factor for profitability in 2019. Once again, we expect AWS to deliver the fastest segment growth rate with 1Q:19 sales rising 43% YoY to $7.77 billion.”

Though its financials look good, White says, “this year has turned out to be more scandalous than anyone could have imagined and more fuel was added to the fire with the plug pulled on Amazon’s planned NYC HQ.” But even with the distractions, the analyst believes, “Amazon has moved forward with new initiatives and innovations,” including in cloud, a new AWS Asia Pacific and a to-be-launched free music service. Further, White says, “in the grocery world, Amazon cut prices again at Whole Foods and the Wall Street Journal reported the company is planning to open another grocery store chain.”

All in all, there is no question that Wall Street loves Amazon stock. The company continues to grow at a scorching pace, and next week’s earnings release is expected to further prove this. TipRanks analysis of 37 analyst ratings on the stock shows a Strong Buy consensus, with 36 analysts recommending Buy and only one saying Hold. There average price stands at $2,125.16, suggesting the stock could rise another 10%. (See AMZN’s price targets and analyst ratings on TipRanks)

 

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