Wall Street analysts say Amazon is shaping up to be a post-pandemic winner when it reports first-quarter earnings on Thursday after the bell. Amidst record profits, surging sales and subscriber growth, the momentum is not likely to slow despite the reopening, analysts say. However, shareholders are looking for that next catalyst to move shares higher with the stock up 6% this year, compared to the Nasdaq Composite, which is up just over 9%. The company's cloud business, Amazon Web Services, remains a top performer. Still, questions remain. Other commentary to watch for includes news about the upcoming Prime Day date, as well as the CEO transition announced earlier this year. Here's what analysts expect from Amazon earnings: "Against a wall of worry, AMZN's 1Q results will likely continue to demonstrate its multi-faceted dominance," UBS analyst Eric Sheridan wrote. The company is making all the right investments and the CEO transition should be seamless, Sheridan said. "We think its 1Q results will show that it has sound momentum as it bridges the succession," he said. Meanwhile at JPMorgan, analyst Doug Anmuth wrote in his preview note that the stock was his "favorite" FANG name. FANG is the acronym which stands for Facebook, Alphabet, Amazon and Netflix. The recently passed government stimulus is likely to play a big role in what Anmuth believes will be an otherwise solid earnings report. "We expect upside to our 1Q revenue estimate of $105B on continued strong e-commerce trends w/investor expectations for $106B+ based on our conversations," he said. Yet others, like Truist analyst Youssef Squali, said his firm still sees the stock as "underappreciated." There's more growth to be found in the company's cloud and e-commerce business, the firm added. The feeling was similar at investment firm Benchmark where analyst Daniel Kurnos said reopening fears are likely overblown. "Despite some domestic weather challenges, incremental 1Q lockdowns and strong underlying ecommerce demand appear likely to drive revenue upside in the quarter. But Monness Crespi Hardt analyst Brian White was a little more cautious, calling the reopening a "potential headwind" for Amazon. Still, the firm wasn't ready to give up on the stock. "We believe this crisis has taken AMZN to a whole new level by growing the number of customers on the platform, expanding the list of products purchased by existing customers, accelerating the shift to ecommerce at large, and enhancing the company's brand," White said. Loop - Buy rating "After being among the largest early-pandemic winners, the stock continues to underperform and is now about flat from its August 2020 highs vs. the S & P500's 19% gain, reflecting concerns over Amazon's ability to meet consensus heading into tough COVID comps. We look forward to demand stimulus from one-day delivery efforts that are just now beginning to catch up to initial plans. We also look forward to what we think will be a broad-based post-pandemic surge in public cloud adoption Jefferies - Buy rating "We expect AMZN will return to outperformance once the market gains clarity on the near-term trajectory of core Retail, supported by attractive growth at higher margin businesses (AWS/Ads). That said, we believe overall revenue growth is a key driver of stock performance and would not be surprised if AMZN remained range-bound until moving past the first difficult comparison in Q2." Benchmark - Buy rating "Shares have been trapped in a relatively narrow trading range since last October despite stellar 4Q results as regulatory and momentum concerns have likely kept upside limited. While we continue to hear about inconsistent consumer data points heading into 2Q, we believe a combination of stimulus money, learned e-commerce behaviors and advertising strength should more than offset the expected impact of reopening, which we suspect will be less than anticipated regardless." Truist - Buy rating "We maintain a Buy/$3,750 PT ahead of 1Q21 results, which we believe will show strong top-line growth fueled by sustained momentum in e-commerce demand both in the US/int'l as the pandemic is taking longer to abate worldwide. ... We believe the market still underappreciates AMZN's elevated [long-term] growth and margin prospects derived from its dominance of two large, secular growth industries, e-commerce and cloud, and emerging leadership in online advertising." Bank of America - Buy rating "Bull case: 2Q revenue outlook above Street as store reopening more gradual than expected & Prime Day does move to June, AWS accelerates slightly given new demand & lapping pressure on transaction volumes. Bear case: 2Q revenue and profit guidance is below Street as mgmt. assumes further pullback in Online spending, Prime Day in July, and more delivery investment. AWS margins miss as competition drives lower margins on new sales." Oppenheimer - Outperform rating "We are increasing our price target to $4,200 and view AMZN as our best 'large-cap pick.' ... Post 1Q earnings focus will continue to be on AMZN's investment plans, as it recorded $11B in one-time COVID-19-related costs in 2020. We expect funds to be redeployed to expand grocery, pharmacy, advertising. Additionally, Street will focus on the sustainability of e-commerce sales growth given outsized 2020 share gains and how the pandemic and re-opening impact AWS outlook." Monness Crespi Hardt - Buy rating "We expect this reopening to be a headwind to Amazon's e-commerce sales as the year progresses; however, we are in unchartered territory in terms of quantifying this impact. Either way, we believe this crisis has taken Amazon to a whole new level by growing the number of customers on the platform, expanding the list of products purchased by existing customers, accelerating the shift to e-commerce at large, and enhancing the company's brand." UBS - Buy rating "Against a wall of worry, AMZN's 1Q results will likely continue to demonstrate its multi-faceted dominance. While this is evident in many ways, a useful measure is AMZN's share of incremental US eComm spending: our model conservatively assumes AMZN grabbed ~26% of incremental eComm sales in 1Q. Maintaining a strong rate of growth will be an indication that AMZN can sustain healthy NA growth in a post COVID-19/stimulus environment." DA Davidson - Buy rating "We see two potential catalysts for shares over the next 12-month period: stronger than expected operating results from the company's cloud computing efforts, which we believe remains the primary driver of its share price & its increasing mix of highly profitable third-party sales." Wedbush - Outperform rating "We expect consolidated revenue and operating income to exceed the high ends of Amazon's guidance ranges, driven by e-commerce share gains over the quarter. For the first time in several years, we think that Amazon's guidance will be close to the mark, and we are modeling only modestly higher revenue and operating profits than the high end of company guidance." BMO - Outperform rating "We think AMZN's difficult revenue comps owing to the acceleration of e-commerce during the pandemic are well understood, but nevertheless will remain the top focus for the print. With that said, we are more intrigued by the potential change in margin profile as some of the ~$13B of COVID-related expenses could fade as vaccinations rise and restrictions ease." Bernstein - Outperform rating "So, what's the deal with Amazon stock? Knowns and unknowns. 1Q e-commerce – and associated ad revenues – benefitted from a continuation of stay-at-home behaviors. Hence, another retail-driven beat would not surprise people too much. It would be accretive to the long-term thesis, but likely not enough in and of itself to get the stock going. It hasn't been for the last two quarters, because the uncertainty around tough comps and the pending management change remain." JPMorgan - Overweight rating "AMZN is our favorite FANG name into 1Q earnings. We expect upside to our 1Q revenue estimate of $105B on continued strong e-commerce trends, w/investor expectations for $106B+ based on our conversations. Looking to 2Q, we believe AMZN is likely to guide to 20%+ growth at the high end even as it laps tough year ago comps, w/our 2Q revenue estimate of $110B ahead of consensus of $108B." Raymond James- Outperform rating "We maintain our positive view on Amazon shares given: continued momentum in eCommerce sales; continued leadership and strong growth in cloud; robust advertising growth; and an improving margin profile driven by retail scale efficiencies, AWS, and advertising."
Amazon.com delivery trucks in Richmond, California, U.S., on Tuesday, Oct. 13, 2020.
David Paul Morris | Bloomberg | Getty Images
Wall Street analysts say Amazon is shaping up to be a post-pandemic winner when it reports first-quarter earnings on Thursday after the bell.
Amidst record profits, surging sales and subscriber growth, the momentum is not likely to slow despite the reopening, analysts say.
However, shareholders are looking for that next catalyst to move shares higher with the stock up 6% this year, compared to the Nasdaq Composite, which is up just over 9%.
The company's cloud business, Amazon Web Services, remains a top performer. Still, questions remain.
Other commentary to watch for includes news about the upcoming Prime Day date, as well as the CEO transition announced earlier this year.
Here's what analysts expect from Amazon earnings: