The explosive growth of online retail and e-commerce eventually had to either slow down or simply fail to meet consensus expectations. In the case of Amazon.com Inc. (AMZN), both turned out to be true. That doesn’t mean the bull case for Amazon is over, though. The stock faced a tough wall of high expectations for the second quarter and has many strong gains for the second half of FY21. (To see Amazon.com stock charts on TipRanks)
Reporting on the instance is Mark Mahaney from Evercore ISI, who believed that a long-term investment hypothesis is still “intact” despite the “miss and lower quarter.”
Mahaney reiterated a buy recommendation for the stock and announced a new price target of $4,200. This target reflects a potential rate of increase of about 25.64% over 12 months, although it was reduced from its previous one of $4,500.
The five-star analyst explained that year-over-year revenue growth was 27% and Amazon Web Services (AWS) saw 37% growth over the same period, exceeding expectations. He added that GAAP operating margins were the highest ever seen in a Q2 for AMZN.
The slowdown in e-commerce spending was partly supported by an increase in social mobility through vaccination initiatives. The difficult comparisons to the first quarter were also the culprits in the subdued earnings pressure.
Looking ahead to Q3 and 2H for FY21, Mahaney sees investment theses supported by Amazon’s “capacity expansion, logistics infrastructure, Alexa and 3P partner development, Amazon Video, Amazon Pharmacy and Grocery expansion.”
On TipRanks, AMZN has an analyst consensus of Strong Buy, based on 31 Buy ratings. The average price target for Amazon.com is $4,217.71, which represents a 12-month upside potential of approximately 26.83%. At the time of writing at 10 a.m. EST Tuesday, AMZN is trading at approximately $3,326.40.
Disclaimer: The opinions expressed in this article are those of the featured analyst only. The content is for informational purposes only. It is very important to do your own analysis before making any investment.