‘Pretty much Google 2.0’ – Analysts reduce Amazon price target, though they say long-term story remains intact
Analysts downgraded their price target for Amazon.com after it reported a lack of third-quarter sales expectations along with low sales forecasts for the upcoming holiday season.
Amazon
AMZN,
shares fell to a low of 20% in pre-market trading Friday to $88.98 per share after the company reported a 15% increase in overall sales to $127.1 billion. in the third quarter versus Wall Street estimates of $128 billion.
The e-commerce giant also said it expects to report fourth-quarter revenue of between $140 billion and $148 billion, about $10 billion above analysts’ expectations.
“We are very optimistic about this holiday but we are realistic that there are various factors weighing on the wallet,” Amazon CFO Brian Olsavsky told analysts on a call Thursday night. everyone’s money.
“While we are encouraged by our progress across the business, the macroeconomic environment remains challenging around the world,” added Olsavsky. “The continued effects of broad-based inflation, rising fuel prices and rising energy costs have weighed on our sales growth as consumers gauge their purchasing power and organizations of all sizes. scale their technology and advertising spending.”
Mark Shmulik, an analyst from Bernstein, said: “The good news here is that the story is not broken, it is only pushed out into 2023 while Q4 could get worse before it gets good. more… pretty much Google 2.0,” said Mark Shmulik, an analyst from Bernstein, who maintains Amazon’s better ratings but cut his price target to $125 from $150 per share.
JPMorgan analysts led by Doug Anmuth believe that the pressures on Amazon are “largely macro, not fundamental.”
It retains an overrated rating but has lowered its price target to $145 from $175 per share to reflect the value of its cloud services.
Amazon Web Services
Amazon Web Services, which accounts for the bulk of the company’s $2.9 billion in profits, posted its slowest revenue growth since 2014 at 27%.
“Similar to the start of the AWS pandemic, customers are asking for discounts and streamlining and/or shifting their workloads to cheaper products. The pipeline is still strong, Shmulik added, but some near-term price pressure is expected to coincide with stiffer competition.
Also: Why the road map for big tech companies may just be starting
Aaron Kessler, an analyst from Raymond James, holds the better rating due to “solid long-term eCommerce growth” and “continued cloud leadership and momentum”.
Kessler reduced his price target for Amazon from $164 to $130 per share due to slower AWS growth and lower fourth-quarter profit.
“While we expect a tougher growth outlook in the short-term, we remain bullish on long-term growth for both retail and AWS with margins improving over time as we move forward,” he said. Amazon is focused on improving productivity.”
