The e-commerce wave is likely to continue, Wall Street analysts said ahead of Amazon 's second-quarter earnings report on Thursday after the bell. Amazon was arguably the biggest beneficiary of the coronavirus pandemic and that probably won't change under new CEO Andy Jassy, according to analysts. Still, investors will be watching for signs of slowing e-commerce growth and what the company will do to counter it. Analysts say Amazon has a plethora of other levers to pull, including growing Prime memberships and Amazon Web Services, as well as making further investments. Shares of Amazon are up over 11% this year, while the S & P 500 is up 17%. Here's what analysts expect from Amazon earnings: "AMZN remains our top idea and we are bullish on shares into 2Q earnings & the back half overall," JPMorgan wrote. However, the firm did acknowledge a sense of urgency surrounding the stock. "We note that there is some investor caution around the Prime Day contribution and 2H growth rates against tough comps," JPMorgan analyst Doug Anmuth said. A similar sentiment was echoed by Morgan Stanley analyst Brian Nowak, who urged calm in his preview note to clients. Nowak said shareholders were too "overly concerned" about revenue deceleration. Meanwhile, investment firm UBS conceded that slowing growth was possible, but also said it could help reset the continually high expectations set for Amazon. Even so, the firm wasn't backing down from its very bullish position on the stock. "The important point is this print will serve as a healthy reminder that AMZN has a dominant position in a secular trend that will continue for some time," analyst Michael Lasser said. Other analysts reiterated their belief that Amazon is a key core long-term holding no matter what happens on Thursday afternoon. "We believe the market still under-appreciates AMZN's elevated LT growth and margin prospects derived from its three pillars, ecommerce, Prime and cloud, and emerging leadership in online advertising," Truist analyst Youssef Squali said. Shareholders should buy the stock now and not look back, Bank of America added. "Despite U.S. eCommerce headwinds in 3Q, we think Amazon will gain share, AWS can see upside, and the stock will have support from discounts embedded in SOTP multiples vs peers," analyst Justin Post said. MKM - Buy rating "We believe two factors have been weighing down AMZN shares: soft Prime Day results, and a highly debated outlook for 2H Retail/Commerce after unemployment benefits lapse. However, on the strength of Amazon advertising, subscriptions (Prime), and cloud computing, we expect AMZN to report upside to Street and its guidance in 2Q." Bernstein - Outperform rating "At times, we've found ourselves throwing our hands in the air on the short-term price performance. But the stock has started to work again after being range-bound for the better part of the last year, and we're incrementally optimistic on the potential for a greater B2B push under Andy Jassy." JPMorgan - Overweight rating "AMZN remains our TOP IDEA and we are bullish on shares into 2Q earnings & the back half overall. ... We believe AMZN is less owned than GOOGL & FB, and sentiment is more cautious than usual based on concerns related to Prime Day growth and 2H expectations. ... .However, we note that there is some investor caution around the Prime Day contribution and 2H growth rates against tough comps." Morgan Stanley - Overweight rating "High level, AMZN remains our top large-cap pick as we think the market is overly-concerned about revenue deceleration and is underestimating the GAAP profit potential in '22/'23 even through reinvestment." Truist - Buy rating "We maintain a Buy rating and $4,000 PT ahead of 2Q21 results, which we believe will show strong top line growth fueled by sustained momentum in ecommerce demand both in the US and int'l, even as the global economy gradually reopens post pandemic. … We believe the market still underappreciates AMZN's elevated LT growth and margin prospects derived from its three pillars, ecommerce, Prime and cloud, and emerging leadership in online advertising." Bank of America - Buy rating "We think stock set-up is best after 4Q guidance is provided, when Street can start looking forward to more normal growth comps in 2022. We are slightly lowering our PO to $4,350, reflecting slightly lower retail revenue estimates and unchanged sum-of-parts multiples. Despite U.S. eCommerce headwinds in 3Q, we think Amazon will gain share, AWS can see upside, and the stock will have support from discounts embedded in SOTP multiples vs peers." Benchmark - Buy rating "Amazon is set to report 2Q21 results this Thursday after the market closes. Shares have just started to sneak out of an almost 12-month trading range, likely aided, unfortunately, by increasing concerns of a pandemic resurgence. While this may ultimately prove to be an incremental tailwind, we think a strong Prime 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 3Q guidance." Wedbush - Outperform rating "Amazon's profitability should expand as it grows opex more slowly than revenues. Amazon Web Services, Fulfillment by Amazon, and ads should drive steady margin expansion, with Prime memberships driving overall retail revenue growth. … We expect Q2 results at or above the high-end of guidance driven by Prime Day, ecommerce share gains, and a recovering economy." UBS - Buy rating "AMZN's upcoming 2Q results should be a favorable event. … Still, we think the market is braced for the slower growth. If anything, a slight moderation in growth this quarter will help to recalibrate expectations for the next few periods. The important point is this print will serve as a healthy reminder that AMZN has a dominant position in a secular trend that will continue for some time." Credit Suisse - Outperform rating "We maintain our Outperform rating, with the thesis based on the following: 1) e-commerce segment operating margin expansion as it grows into its larger infrastructure, 2) optionality for faster-than-expected [free cash flow] growth vis-à-vis its advertising segment, and 3) upward bias to AWS revenue forecasts and likely more moderate deceleration path as suggested by ongoing capital intensity in the business." Raymond James - Outperform rating "We maintain our positive view on Amazon shares given: 1) continued momentum in eCommerce sales; 2) continued leadership and strong growth in cloud; 3) robust advertising growth; and 4) an improving margin profile driven by retail scale efficiencies, AWS, and advertising." Telsey - Outperform rating "Overall, we believe Amazon is executing at a high level and gaining market share by leveraging its sticky Prime member base, small business relationships, and retail consolidation. Amazon's focus on newer business — grocery, pharmacy, fashion, home, private brands, third-party, same-day & one-day delivery, Amazon Logistics, and telehealth — is making Amazon more valuable."
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The e-commerce wave is likely to continue, Wall Street analysts said ahead of Amazon's second-quarter earnings report on Thursday after the bell.