The e-commerce leader for physical and digital merchandise, Amazon, is expected to report its fourth-quarter earnings of $3.9 per share, which represents a year-over-year decline of over 70% from $14.09 per share seen in the same period a year ago.
However. the Seattle, Washington-based multinational technology giant would post revenue growth of about 10% to around $138 billion. The company has beaten earnings per share (EPS) estimates most of the time in the two years.
Amazon stock closed 0.79% lower at $2777.45 on Wednesday. The stock slumped nearly 17% so far this year after rising just over 2% in 2021.
“Amazon’s high-margin businesses continue to allow Amazon to drive greater profitability while still continuing to invest (last mile delivery, fulfillment, Prime Now, Fresh, Prime digital content, Alexa/Echo, India, AWS, etc). Amazon Prime membership growth drives recurring revenue and positive mix shift. Cloud adoption hitting an inflection point. Advertising serves as a key area for both further growth potential and profitability flow-through,” noted Brian Nowak, equity analyst at Morgan Stanley.
“Our deep dive estimates that AMZN employs ~68k engineers (ex AWS), spending ~$19bn on engineering/year. Most of this is likely core, but if 30% of this is from AMZN’s 10+ emerging projects, it would imply ~$6bn of “Other Bets” investment, and that retail margins are ~160bps better than reported.”
Amazon Stock Price Forecast
Thirty analysts who offered stock ratings for Amazon in the last three months forecast the average price in 12 months of $4,150.83 with a high forecast of $4,700.00 and a low forecast of $3,800.00.
The average price target represents a 49.45% change from the last price of $2,777.45. All those 30 analysts rated “Buy”, according to Tipranks.
Morgan Stanley gave the base target price of $4200 with a high of $5500 under a bull scenario and $2300 under the worst-case scenario. The investment bank gave an “Overweight” rating on the e-commerce leader’s stock.
Several other analysts have also updated their stock outlook. BofA Global Research raised the price objective to $4,450 from $4,250. Cowen and company lifted the target price to $4,500 from $4,300.
“We are reiterating our BUY rating and our price target to $3,900. Our price target is based on our updated discounted cash flow model, including our long-term adj. EBITDA margin forecast of 22.0% versus 13.7% in 2020,” noted Tom Forte, MD, Senior Research Analyst at D.A. DAVIDSON.
However, technical analysis suggests it is good to sell as 100-day Moving Average and 100-200-day MACD Oscillator signals a selling opportunity.
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