As more consumers return to restaurants, events, and vacation destinations, analysts are concerned that Amazon.com Inc.’s earnings report. It will reflect the slowdown of e-commerce.
It is due to report second-quarter earnings Thursday after the closing bell.
“Currently, we think it is understandable that overall e-commerce sales slowed in the second quarter,” wrote UBS analysts led by Michael Lasser, citing the latest census data showing a 12% increase in out-of-store sales in the second quarter (which mostly consist of on e-commerce). E-commerce sales growth was 26% in the previous four quarters.
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“There are likely to be many reasons for the change in trend, including reopening of stores and a shift to leisure activities and travel (eg there is less need for online ordering when you are on vacation).”
UBS also suggests that returning to the office can reduce the number of shoppers who click to buy.
“This means less time at home, which reduces the need to order some products online like groceries.”
UBS rates the purchase of Amazon stock at $4,350.
Consumer Intelligence Research Partners (CIRP) data indicates that Amazon’s focus on adding more than 200 million Prime members worldwide is paying off.
“Besides meeting the obvious and huge challenge of scaling to accommodate growing demand, Amazon has mostly convinced shoppers to join Prime,” CIRP partner and co-founder Josh Luitz said in a statement.
“The developed Prime membership model has worked well, with Amazon acquiring approximately 30 million new Prime individual shoppers in the US in the past 12 months.”
However, Zack notes that shares of both Amazon and Apple Inc. AAPL,
It has lagged behind other technology stocks.
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“The market seems to see the outperformance of these two epidemic leaders at the expense of future periods. This view likely explains why the market ignored the outstanding results of both players in April,” Shiraz Mian wrote in a report published on Friday.
Benchmark analysts remain optimistic, though for a shocking reason.
“Stocks are just beginning to slip out of a roughly 12-month trading range, and that is likely to be helped, unfortunately, by heightening fears of a resurgence of the pandemic,” wrote Daniel Cornus.
Standard rates Amazon stock purchases with a $4,400 target price
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Amazon has an average stock buy rating and an average price target of $3,690.02, according to 50 analysts polled by FactSet.
Here’s more of what you should know about Amazon before it reports second-quarter earnings:
gains: FactSet consensus earnings per share is $12.28, up from 10.30 last year.
Estise, which compiles estimates from buy-side and sell-side analysts, hedge fund managers, executives, academics and others, forecasts EPS of $15.17.
Amazon has won the FactSet EPS consensus in the past four quarters.
Read: Many Amazon Prime Day customers placed more than one order, with 11% placing five or more
Revenues: FactSet’s consensus is on revenue of $115.37 billion, up from $88.91 billion last year.
Estimated expected revenue $118.07 billion.
Amazon has won the FactSet revenue consensus in the past 10 quarters.
Share price: Amazon shares have gained 13.5% for the year so far. The Amplify Online Retail ETF IBUY,
Gained 8.9%. and the S&P 500 SPX Index,
It is up 17.5% from the period.
– Perhaps the Prime Minister’s day was dull. UPS analysts say this year’s Prime Day event, which took place on June 21 and 22, was “disappointing.”
However, other analyst groups are more optimistic.
“[W]I think a strong peak day, early back-to-school season with potential shortages, and no apparent slowdown in consumer spending could contribute to an upside surprise and better-than-expected guidance for the third quarter,” Benchmark wrote.
Trust Securities uses data from the Adobe Digital Economy Index, which showed a 6.1% increase in Prime Day sales to $11 billion, and other data points to determine that the event was a “success.”
Wedbush analysts believe Amazon Web Services will drive future revenue growth.
“We believe Amazon Web Services will continue to grow at a high rate this year,
Up nearly 29% year over year, driven by a secular shift toward cloud storage, partnership agreements, and international expansion,” the analysts wrote.
Wedbush rates Amazon’s stock as outperforming its $4,300 price target.
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Amazon will continue to invest in video content after the MGM announcement. Amazon announced in May that it would acquire MGM movie studio, an $8.45 billion deal subject to Federal Trade Commission review.
Truest analysts say the addition of MGM content, which includes James Bond films, along with an $11 billion investment in Prime Video content and music, as well as investments in logistics and fulfillment, are part of Amazon’s efforts to boost its flagship offerings.
“We view all of these investments as evidence of Amazon’s customer-obsessed ethos as the company continues to pour money into additional services to make Prime
A much more valuable membership, which should increase engagement, reduce growth, expand long-term value and enhance the benefits of the Amazon scale over time,” Trost wrote.
Trust is evaluating the purchase of Amazon stock with a target price of $4,000.
Credit Suisse analysts say investment activity will also shift towards last mile delivery.
“We believe the outcome of this increased investment activity will be a resumption of the one-day expansion of Prime delivery (which reached 50% before pandemic capacity headwinds),” the analysts wrote.
“As the company typically rolls out new assets to fulfill during the third quarter with the holidays around, we think it won’t be long before it announces a faster delivery option.”
Credit Suisse rates Amazon stock as an outperformer with a $4,850 price target.
Amazon maintains advertising momentum. Trust analysts also note that Amazon’s advertising business has grown 40%-50% over the past several quarters.
“Our conversations with marketers indicate that sellers continue to rely heavily on Amazon, given the direct response and high nature of the platform,” the analysts said.
Additionally, as a high-margin company, strong ad growth is a material source of operating leverage, which offsets higher shipping and fulfillment costs.