Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Analysts Are Bullish On Amazon Stock. Should You Be, Too? 

By Investing.com (Haris Anwar/Investing.com)Stock MarketsSep 01, 2021 07:26
uk.investing.com/analysis/analysts-are-bullish-on-amazon-stock-should-you-be-too-200495275
Analysts Are Bullish On Amazon Stock. Should You Be, Too? 
By Investing.com (Haris Anwar/Investing.com)   |  Sep 01, 2021 07:26
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Amazon (NASDAQ:AMZN) stock is offering an interesting risk-reward proposition right now. Shares are going through a bearish spell triggered by the e-tail giant's Q2 earnings release on July 29, which included guidance from Amazon indicating that the Seattle-based company is entering a slow patch.

Amazon Weekly Chart.
Amazon Weekly Chart.

Management noted AMZN could find it hard to beat expectations after a year-long boom in online purchases, fuelled by the pandemic-driven buying frenzy. Indeed, so far this year, Amazon has underperformed its peers in the trillion-plus-market-cap club.

Shares of Microsoft (NASDAQ:MSFT) have surged 36%, while Apple (NASDAQ:AAPL) stock rose about 15% this year. Meanwhile, Amazon closed Tuesday at $3,470.79, down 9% from its record high in July.

Still, a majority of Wall Street analysts are bullish on the company’s future growth prospects, recommending it to clients and tagging it as a buy.

Consensus Estimates.
Consensus Estimates.

Chart: Investing.com

Of 49 analysts polled by Investing.com, 48 had a buy rating on AMZN, labelling it a stock that will 'outperform.' Their consensus 12-month price target shows a 21% surge from where the stock is trading today.

It’s hard to predict how accurate analysts’ bullish estimates will prove in the year ahead, but Amazon’s latest guidance shows that the company could find it hard to beat expectations after a year-long boom in online purchases, fueled by the pandemic-driven buying frenzy.

Indeed, during its second-quarter earnings call in July, Amazon provided a rosy outlook, something that would have satisfied growth-hungry investors. Shareholder focus was on the company's core e-commerce business, which is indeed slowing, especially at the same time that founder Jeff Bezos has handed over the chief executive role to long-time lieutenant, Brian Olsavsky. In a conference call, the new CEO didn’t mince words regarding the situation, telling analysts the slowdown in sales will continue through the remainder of the year.

Long-Term Growth Story

The e-commerce company’s disappointing outlook came along with revenue that missed estimates for the first time since 2018. Analysts have pared back their expectations in the wake of the report. For Amazon’s current quarter, the average earnings estimate has dropped about 16.5% over the past month, according to data compiled by Bloomberg. The revenue consensus has fallen by nearly $6.5 billion, or 5.5%, over the same period.

But overwhelmingly positive sentiment among analysts shows that this weakness in one of the best mega-cap stocks is a buying opportunity. Even as growth decelerates from pandemic-era levels, analysts see long-term growth for its online retail and cloud-computing divisions, along with its advertising business, which is currently thriving.

According to Susquehanna analyst Shyam Patil, the stock has a 50% upside from here, and he thinks now is a “great time to buy” shares.

His recent note to clients stated:

“Looking at the two-year compounded annual growth rates, trends are still very strong and we see no reason to be concerned. Ultimately, we continue to see Amazon as a long-term secular grower underpinned by its strong e-commerce, cloud and advertising businesses.”

Susquehanna’s forecast is among the most bullish on Wall Street, but many analysts agree that Amazon continues to remain their preferred e-commerce play despite the recent slackness in growth.

Evercore ISI, which has an “outperform” rating with a $4,200 price target, said in a recent note:

“Our long-term thesis is intact for Amazon....Tactically, AMZN shares may well be range bound near term as investors debate whether AMZN can recover to 20% reported Y/Y revenue growth in 2022. We believe it can, given the size of its TAMs (total addressable market), its new growth initiatives and its execution track record.”

Bottom Line

After remaining an underperformer this year, Amazon shares present as a more attractive option among the mega-cap tech behemoths. There is a good likelihood the stock will catch up to its peers, especially as the pandemic continues to rage in many parts of the world, accelerating the ongoing shift to e-commerce and cloud-computing.

Analysts Are Bullish On Amazon Stock. Should You Be, Too? 
 

Related Articles

Analysts Are Bullish On Amazon Stock. Should You Be, Too? 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
A B Services
A B Services Sep 01, 2021 18:06
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Agree
abuhares h tv
abuhares h tv Sep 01, 2021 17:56
Saved. See Saved Items.
This comment has already been saved in your Saved Items
nice
som sithy
som sithy Sep 01, 2021 7:28
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hello
Prince Darwish
Prince Darwish Sep 01, 2021 7:28
Saved. See Saved Items.
This comment has already been saved in your Saved Items
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email