Here's what every major analyst had to say about Amazon's plunge: 'Wait for the dust to settle'

Given the multiple pathways ahead for rev growth (Int'l mkts, food, CPG, private label, cloud computing, advertising), we are not worried about AMZN's ability to produce sustained LT rev growth. While the stock could trade sideways over the next few months as investors debate a new normal of rev growth, we remain focused on a mix of rev growth & margin expansion which allows investors to think about valuation against compounded profit growth from '19-'21. We continue to reiterate our stance that AMZN is a core holding within our coverage universe to gain exposure to secular growth trends in eCommerce (geo & category expansion), cloud computing, media consumption, digital advertising & AI voice assistants.

Amazon reported Q3 profitability well above consensus forecasts, with operating income margin expanding ~580bps y/y driven by AWS, advertising, and fulfillment efficiencies, as revenue growth ex-Physical Stores decelerated ... AWS and North America segments drove the outperformance in the quarter ... management noted that Amazon fulfilled units (AFN) growth was higher. We continue to believe AMZN represents the best risk/reward in Internet given the relatively early stage shift of workloads to the cloud, the transition of traditional retail online, and share gains in its advertising business, the long-term benefits of each we believe the market is underestimating for Amazon.

Deceleration in growth is a concern given competitors' strength (WMT US eCommerce up 40%), but AMZN had an unusual 5 point tougher y/y comp in Online Stores revenue growth. Similar to prior quarters, the cloud and advertising businesses drove a margin surprise and profit upside (op. margin at 6.6% beat our 4.1%), but the 4Q margin outlook disappointed, partially due to a Prime accounting change ($300mn) and employee raises.

We remain bullish long-term, with AMZN now at ~16X '20 EBITDA for ~40% '17-'20E CAGR growth (see Exhibit 1) – though acknowledge that it is likely to take a strong 4Q result – strong top-line, evidence of continued profitability into '19 – and a more "growth friendly" market to materially drive out-performance ... High margin revenues (Advertising, Subscription, and AWS), fulfillment efficiency and smaller fulfillment build, and management not expecting a material impact from the potential USPS rate hike ... Bears will likely pick at the deceleration of AMZN's revenue ex- Whole Foods, which has decelerated from ~30% Y/Y at the start of the year to guidance of 10- 20% Y/Y for 4Q:18 ... we see any share price weakness as an issue of timing (in a tough tape for growth stocks) as we wait for AMZN to further penetrate these new markets to accelerate growth.

We don't see any real structural issue with AMZN but nearly every line in the business is decelerating a tad, and we typically see another deceleration in retail in 4Q, hence are struggling to identify a catalyst. Shares are up 52% YTD, hence this kind of "growth scare" is likely to weigh on sentiment in the near term, but ultimately will work itself out (likely by 1Q19). We would wait for the dust to settle a bit before adding to positions.

It was another quarter of consistent results as Amazon's operating profit significantly exceeded CS and consensus estimates as it reaps the benefits of the aggressive investment cycle which began in 2H16. And 4Q18 operating profit guidance looks particularly conservative as a sequential decrease seems highly unlikely in its largest quarter. And as Amazon should continue to see efficiencies on shipping (due to improving unit economics in its Flex driver network) as well as fulfillment (due to robotics) expenses, we believe there remains a strong upward bias to our as well as Street estimates. We maintain our Outperform rating.

Overall, Amazon remains a top pick and is on our Analyst Focus List ... We recognize that AMZN shares are still up 41% YTD and there will be increased concerns around deceleration and future growth. We believe shares could remain under pressure near-term as a result, but we think there is 4Q profit upside and potential for re-acceleration in 1Q19. We believe any pullback will prove to be a good buying opportunity. We reiterate our Overweight rating & our 2019 price target goes from $2,200 to $2,100.

We think the stock is reacting to the 3Q revenue result and 4Q guidance, but this ignores the impact of the shift from 1P to 3P, the comp'ing of Whole Foods and Souq acquisitions, and the Prime accounting change. Operating Income is set to exceed $4bn in 4Q and we think GAAP EPS could reach a run-rate of $50/share in two years. All in, despite the topline noise, we view the 3Q results and 4Q outlook as supportive of our bullish thesis. Our earnings forecasts increase, though our 12-month price target decreases 6% to $2,125 from $2,250 as we increase our risk-free rate in our DCF model.

AMZN posted generally positive Q3 results—In-line Revenue with the highest Gross Margin we have seen in any third quarter & record high Operating Margin. $1.3B Operating Profit upside was AMZN's biggest ever. That said, guidance came in below expectations although, for Operating Margin in particular, given the historical seasonality, we believe there could be upside. Reit Outperform. PT goes to $2,300.

We are modestly reducing our top line estimates for 2019 and 2020, but our Operating Income expectations are higher in both years. We believe that while growth in the core retail business may appear to slow down in the immediate term, we are at far from saturation levels, and that there are several levers the company can pull to reaccelerate, including more omnichannel, grocery, pharmacy, advertising, and additional international markets/verticals, etc. In effect, we think the after-hours decline in share price may have created an attractive entry point for the patient investors, especially if the weakness persists. We continue to believe there is massive runway ahead; we maintain our $2,300 TP and reiterate our Buy rating on the shares.

While AMZN issued "appropriately conservative" 4Q guidance, even at the high end, 3Q results should be enough to keep investors involved in the stock. While AWS revenues slowed, margins were much better than expected. Meanwhile, US revenues were solid, with a nice margin beat. The only notable weakness was slowdown in International revenues (ex FX), but faced a difficult comparison (two-year average growth basically same as 2Q), while International losses were better than expected. Capital efficiency was very strong, reflecting ability to utilize excess capacity. Over the past few years, AMZN has become a gross profit vs. revenue story, given the mix to 3P and newly-formed advertising division. As formal guidance is focused on revenue and operating income, we view guidance as less important than reported results.

Amid a tenuous market, AMZN's missed sales and EBIT ( despite lowered expectations ) and a below-Street guide, proved enough to weigh on shares after market. Looking forward, we continue to point to mathematical earnings growth via margin mix shift as every business in AMZN's stable is growing faster than 1P. And even with what appears to be a slowing in underlying Prime Member growth (fig 5), we expect margin lifts to provide meaningful EPS upside, as seen last night. Reiterate Buy following the sell-off.

Amazon reported revenue 1% below the Street, but op income 76% above ... The mid-point of Q4 op income guidance is ~25% below consensus expectations, but it's worth noting that Amazon has beaten Q4 op income guidance by an average of 94% over the past three years, suggesting that a typical beat would far exceed where consensus Q4 expectations were going into the quarter. While some investors may be disappointed with the deceleration in revenue growth, we are encouraged by the potential for ongoing margin expansion and bottom line upside. Reiterate OW on AMZN, our PT is now $2,050.

We think investors are likely going to be modestly disappointed by 3Q's greater than expected deceleration in unit growth, 3Q's international growth slowdown, and 4Q revenue and OI guidance, which at the midpoint were below Street estimates (4Q revenue guide worse than OI guide). On the plus side, 3Q bright spots included efficiency gains from slower headcount growth along with growing fulfillment and data center efficiencies. These cost efficiencies, in conjunction with high margin AWS and advertising revenue growth, propelled a QoQ 100bps operating margin expansion to 6.6% (and 3Q NA operating income over $1bn above our estimate). This trend only serves to reinforce the notion of Amazon's thesis creep towards profitability from revenue growth (for more on this topic see here). While the Prime accounting change, lapping of the Whole Foods acquisition, and the Diwali timing shift (+ve) are factors heading into the 4Q, we think the 10-20% 4Q revenue growth guidance (8 points below our outlook at the midpoint, and the lowest 4Q guide since 4Q14) likely weighs on sentiment from here. All-in-all, while we maintain our Outperform rating, we moderate our 4Q18 and 2019/20 revenue growth estimates. As such, we also lower our Target Price to $1,970, from $2,200, implying ~21.5x 2020 EV/EBITDA.

AMZN's 3Q18 results were mixed, as Op Inc. (GAAP) was 46% above our forecast, but revenue was 1% lower than expected as NA strength was offset by an Int'l shortfall. 4Q18 rev. guide calls for +11%-21% y/y growth x-FX vs. our/cons. estimates of +21%/+22%, while the high end of Op Inc. guide bracketed our estimate. Our new forecast moves our PT to $2,250/share from $2,300. Maintain Outperform.

Amazon 3Q results were mixed as revenue fell short of expectations while operating income exceeded forecasts. The company guided the high end of 4Q revenue and operating income below our and Street expectations. The lower operating margin guidance is somewhat surprising given the beat in the seasonally weak 3Q ... Weaker than expected guidance may caution some, though we note results remain strong on an absolute basis and maintain our positive view given Amazon's leading position in the Cloud services and retail sectors and the growing margin opportunity as the revenue mix shifts towards the higher margin AWS and advertising businesses.

Bottom Line: 3Q revenue and 4Q guidance were a little light, but there was nothing to change our core 12-month and long-term thesis of "investing while growing margins"; thus, AMZN remains our Top Pick and we recommend buying the weakness. We believe several variables (Diwali timing in India, ASC 606 change for Prime fees, FX, etc.) contributed to softness, but none impacts ongoing fundamentals. Instead, we see AMZN increasingly driven by higher-margin subscription, advertising, and cloud revenues, and the long, slow gradual margin expansion continuing.

AMZN reported strong Q3 with Rev of $56.6B (+29% Y/Y) just $530M shy of cons. However, Op Inc was $1.6B ahead of cons and 6.6% Op Mgn was the highest in 14 yrs. EPS came in $2.66 above Street's $3.09. Q4 guide disappointed with 15% rev growth (midpoint) but deceleration was expected as AMZN lapped the WFM acquisition. Operating efficiencies across fixed costs (infrastructure, workforce) are encouraging. We remain bullish on the stock and fine-tune PT to $2,300.

AMZN delivered strong operating income at $3.7bn, beating consensus by 70%+. The retail margin expansion continues as efficiency was gained continuously in both US and international markets. However, revenue and OI guidance missed by 7% and 8%, respectively. We believe management's guidance is conservative, and we are maintaining our 2020 EBITDA estimate of $53bn. Maintain Buy rating and PT of $2,150, based on 20x our 2020 EBITDA estimate vs. CAGR of nearly 30%. We still see room for more upside from CBT into of China, advertising, expanding prime SKUs and AWS, yielding a 30% upside in EBITDA to the street's estimate in 2020.

Amazon reported in-line Q3 revenue along with strong profitability ... The stock is facing pressure after hours likely due to a more moderate Q4 revenue guide, which implies decelerating growth to 15% y/y. We find this less concerning as 1) a large factor is lapping Whole Foods; and, 2) we expect drivers like AWS and 3P to help gross profit growth remain at higher levels in Q4 and beyond. We continue to think AMZN offers the most reliable growth outlook in our coverage, and would use any weakness as a buying opportunity.

We maintain our positive view on shares of Amazon and maintain our price target of $2,000. Amazon delivered somewhat mixed 3Q results with in line revenues, lower unit growth (15% y/y), offset by strong operating income upside driven by strength in higher margin AWS and advertising and fixed cost leverage. While 4Q guide was below the street, we believe guidance is likely conservative. We maintain our Outperform rating.

AMZN posted a solid 3Q, but for the time being, the core retail business is entering a phase of slower growth. Advertising and AWS drove margin expansion, but cost pressures (labor, fuel) and the likelihood of stepped up hiring will act as a medium-term retail cost headwind. For AWS, revenue came in line, but the surprise came from the strong +79% EBIT growth.

AMZN reported revenue slightly below consensus (less than 1% miss) with significant profit upside. Operating income for Q3 was about 75% ahead of consensus and 55% above the high-end of guidance. Upside was driven by margins at North America retail and AWS. Q4 guidance was soft, implying significant top-line deceleration about 1,350bps at the midpoint inclusive of 80bps anticipated f/x headwind. Margin guidance was also soft, about 120bps below consensus at the midpoint.

We reiterate our Buy rating/raise our PT to $2,250 to reflect 1) solid top line and impressive out-performance in operational efficiency/profitability, and 2) the shifting of our price target to year-end 2019 from 2018. We believe the 4Q18 revenue guide (which is shy of consensus) is on the conservative side, as the company is greatly positioned to benefit from a robust holiday season (with a record >100M Prime manageable items available for free 2-day shipping, for >100M members) and 4Q tailwinds in India. Market jitters have the stock down on 4Q18 guidance, but we would be buyers.

After the close, AMZN reported a solid 3Q18 that included a +29.3% revenue increase (vs. our +31.0% est.) and better-than-expected margins/CSOI (6.6% op. margin vs. our 4.2%; $3.7bn op. income vs. our $2.4bn). Amazon's expanding Prime membership is driving strong retail growth, alongside a fast growing AWS business, while profitability gains are materializing due to AWS, advertising, and overall efficiencies/scale. We remain BUY-rated, with a $2,000 PT, and would use recent/any further potential share price weakness following the 3Q result as an incremental buying opportunity.

Q3 op profit materially beat expectations despite revenue falling short as the company seemingly continued to place greater emphasis on efficiency over aggressively pursuing growth. Furthermore, with Q4 revenue and op profit guidance both falling short this trend seems set to continue near-term, with conservatism likely the primary reason for the disappointing profit outlook. However, with little apparent evidence of structural / competitive pressures and ongoing significant growth opportunities we remain Overweight.

The market narrative of a global slowdown in growth certainly did not help AMZN tonight and the equity was down approximately 7% in afterhours trading. While unit growth slowed to 15% y/y in the quarter, it is important to note that so much of Amazon's business is now expanded beyond just physical packages, with physical stores not counted, as well as 3P services, subscriptions, AWS, and other revenue all comprising nearly half of the entire business. These other areas are all growing faster and are contributing towards the rapid expansion in profitability, which in our opinion, is unlikely to slow in 4Q18 despite the guidance.