Amazon.com, Inc. Stock On A Seesaw: Analysts Mix It Up With Price Targets

Amazon stock declined after last night’s sales miss and weak guidance, and it seems that analysts aren’t quite sure what to do about that. Most remain bullish on the online retailer, but it seems almost as if there is one price target increase for every price target cut on Amazon stock this morning. Interestingly, some of the analysts who had a $1,000 price target on the stock have backed off now, while at least one firm has boosted its target even beyond that mark.

Amazon stock target cut to $965

Cantor Fitzgerald analyst Youssef Squali slashed his price target for Amazon stock from $1,000 to $965 but remains Overweight on it due to its leadership in e-commerce, as it holds about 35% of the U.S. market and has a growing global footprint. Also the company is leading in cloud computing and focuses intensely on the consumer and value proposition. Its sales rose 22% year over year to $43.7 billion, versus the consensus of $44.7 billion, as growth in Amazon Web Services eased due to “aggressive” price cuts. AWS revenue rose 47%, versus 55% in the previous quarter, both on a currency-neutral basis.

He noted that worse-than-expected currency headwinds weighed on the company’s results. He said Amazon took a $558 million hit from currency exchange during the fourth quarter. GAAP earnings came in at $1.54 per share, as the company reported better-than-expected margins in North America even amid rising infrastructure and video investments. Consensus stood at $1.35 per share.

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The online retailer guided for first quarter sales of $33.25 billion to $35.75 billion, against the consensus of $35.99 billion, and $250 million to $900 million in operating income, versus the consensus of $1.3 billion. However, Squali pointed out that this guide includes about a $730 million hit from currency exchange.

Amazon stock target raised to $975

Jefferies analyst Brian Fitzgerald moved in the opposite direction on Amazon, boosting his price target by $25 to $975 per share. He feels that the stock is still a “core” holding in e-commerce and “one of the best large-cap ideas” in his coverage universe. He also sees “plenty of growth opportunities ahead.”

He feels that investors should buy Amazon stock on the weakness because the company is best-positioned as consumers shift their spending from offline to online. He noted that e-commerce has about a 10% penetration rate but expects this to grow to 25% to 30% in the long term. Further, he said that the online retailer keeps “reducing friction” for shoppers by improving its product selection, making more products available and offer higher levels of service. He feels that Amazon’s ability to move goods to consumers fast is a big differentiator that is driving growth and will continue to drive growth.

Beyond e-commerce, he called Amazon Web Services “a revenue growth engine with corresponding margin accretion to the overall business.” He also sees the international opportunities for the company as great.

Other price target changes for Amazon stock

Many other analysts adjusted their price targets for Amazon stock, although there was no consensus in terms of direction. One trend is that fewer analysts still have a $1,000 price target. We started to see price targets hit and exceed this level only over the last several months, but all it took was a single earnings report to slow that trend.

Deutsche Bank analyst raised their price target on Amazon stock from $920 all the way up to $1,050, putting them ahead of most others now, it seems. JPMorgan cut its target from $965 to $945, while Instinet trimmed its target by $25 to $925. Raymond James analysts boosted their target on Amazon stock from $900 to $925, while Macquarie reduced its target from $935 all the way down to $895. Canaccord Genuity analysts bumped up their price target from $875 to $900, while UBS cut its target by $20 to $930.

Shares of Amazon stock slumped by as much as 3.4% to $811.28 during morning trades on Friday.