For the second quarter, the tech titan reported earnings per share of $15.12 and revenue of $113.08 billion. Earnings were higher than expected at $12.30 per share, but revenue was lower than expected at $115.2 billion, according to Refinitiv analysts polled.
Amazon closed Thursday at $3,599.92, down 0.8 percent on the day, and dropped another 6.3 percent. in premarket trading Friday.
“Amazon’s slower-than-expected retail revenue growth and lower profitability (due to increased investment) drive down estimates today. In the long run, we see these investments leading to deeper core retail and AWS moats (which is why we remain bullish),” according to the Morgan Stanley note.
Similarly, UBS analyst Michael Lasser reduced his price target on Amazon from $4,350 to $4,020 per share while maintaining his buy rating.
“In the past, it has been prudent to accumulate AMZN shares when they have retreated in response to an investment cycle. We believe it would be prudent to do the same now. We are lowering our EPS [estimates] due to slightly lower NT rev assumptions and ongoing fulfillment investments. However, these should pay off in the long run, according to the UBS note.
Here’s what analysts had to say about Amazon’s earnings:
Atlantic Equities – Overweight; price target reduced from $4,000 to $3,800.
“Q2 revenue was missed, and Q3 revenue and operating profit guidance were lower than expected, as reopenings slowed Amazon’s sales growth more than expected, with the lower top line reducing leverage. On the other hand, AWS delivered an impressive acceleration and advertising outperformed expectations, and with both of these key profit drivers remaining strong, we continue to see attractive profit growth in 2022, though we are slightly lowering our projections.”
Mizuho – Buy, with a price target of $4,100 up from $4,400.
“With expectations reset, we are lowering FY23 EBITDA by 6% to $130 billion and PT from $4,400 to $4,100, but we believe 3Q21 revenue guidance may be conservative due to the return of back-to-school.
Barclays – Overweight, price target reduced from $4,300 to $4,130.
“Amazon reported revenue and OI that were 2% and 1% lower than expected, respectively, and guided for a lower 3Q.
Bank of America – Buy, price target reduced from $4,350 to $4,250
“We believe the results indicate a larger slowdown in May/June online retail spend than expected (negative read for eBay/Wayfair), while the 3Q revenue guidance miss partially reflects the Street’s failure to properly account for the Prime Day shift impact on 3Q….” Amazon stock was down as much as 7% in AH trading, most likely due to the disappointing revenue guidance and possibly AWS margins, but we believe the company remains in a strong position in the industry, with US retail growth exceeding our industry sales.′
Evercore ISI – Outperform, price target reduced from $4,500 to $4,200.
“Our long-term thesis for Amazon remains intact…
Tactically, AMZN shares may be range bound in the near term as investors debate whether AMZN can return to 20% reported Y/Y revenue growth in 2022 – we believe it can, given the size of its TAMs, new growth initiatives, and track record of execution. Investors will also debate the potential ROI on Amazon’s most recent investment cycle, namely its declining operating margins in H2:21.”
JPMorgan – Overweight, with a price target of $4,100, up from $4,600.
“Slower growth and increased investments make the shares more difficult to trade, but we expect revenue growth to normalize around 20% next year, and AMZN’s investments in fulfillment and logistics bode well for future growth, including for AMZL and MCF (multi-channel fulfillment).”
Jefferies recommends a buy with a $4,200 price target.
“Amazon’s highest margin businesses accelerated once more in the second quarter, while core-retail slowed due to difficult comps and increased mobility. Despite revenue guidance for the third quarter falling short of expectations, our revised estimates indicate that core-retail growth will remain above pre-pandemic levels over the next two years.”
KeyBanc – Overweight, price target of $4,000
Nonetheless, Prime Member spending is up year on year, and overall competitive dynamics remain more favorable than before COVID. AWS growth was strong (+37%), and corporates focusing on growth investments should be a tailwind. We maintain our OW rating due to strong long-term share (and earnings) opportunities.”
Stifel Nicolaus – Buy, $4,400 price target
“We believe the setup is appealing now that the shares have passed through the COVID comp reset. We would be buyers on the share decline caused by tonight’s report, and we keep our $4,400 price target.”
Piper Sandler – Overweight, price target reduced from $4,000 to $3,904.
“On the negative side, management noted that online shopping behavior has changed, with consumers exceeding last year’s demand and increasing mobility. Management expects the pattern of difficult year-over-year revenue comparisons to continue for the next several quarters. Furthermore, management alluded to a recent pullback in demand, which would necessitate additional investment to catch up. Essentially, while consumer demand has dwindled as a result of the pandemic, investment has remained high.”
Cowen – Outperform, price target reduced from $4,600 to $4,400.
“Amazon’s 2Q21 results were softer than expected, with revenue 1.8 percent lower than expected as higher consumer mobility impacted eCommerce demand, dampening further acceleration at AWS and adv.; Op Income was also 1 percent lower than expected. Meanwhile, 3Q21 revenue and earnings guidance were lower than expected due to tougher eCommerce competition and higher fulfillment costs.”
Truist – Buy, price target reduced from $4,000 to $3,800.
“2Q21 marks Amazon’s first earnings miss since the outbreak began, reflecting a mixed picture of softening demand in its Online Stores segment but sustained strength in AWS, 3P, and advertising, which drove improved margins. While ecommerce demand may be normalizing as a result of the re-opening, we still expect AMZN to post mid-teens growth against a difficult +40 percent in 2H20, with re-acceleration in FY22.”
Oppenheimer – Outperform, price target reduced from $4,400 to $4,200.
“While we have reduced our target to $4,200 from $4,400 due to expected slower 2H growth, we are maintaining our Outperform rating, given the prospects for long-term gains ahead of AMZN…”
While growth in high margin segments slowed in the second quarter, it continued to outpace growth in the overall business, leaving room for profit growth in the second half.”
Guggenheim is a buy with a $4,200 price target.
“We continue to believe Amazon is well-positioned for the long term, and we reiterate our BUY rating and $4,200 price target. We would take advantage of the stock’s weakness and purchase it. While the company’s year-over-year growth rate moderated into the mid-teens in 2Q21, and the company will continue to face difficult top-line comparisons in coming quarters, we continue to see a favorable backdrop for the company and the shares through the balance of 2021 as top-line growth should remain healthy, but decelerating.”
Bernstein – Outperform, with a price target of $4,000 up from $4,200.
“At some point, when you have 40% of US eCommerce and 7-8% of US retail, it becomes more difficult to create beta beyond overall retail trends….” The revenue and EBIT guidance were also lower than expected, reminding everyone that Amazon is still primarily a retail-focused company.”
Needham – Buy, price target of $4,150
“Amazon is a services company, not a products company (in our opinion), because Services revenue reached 49 percent of 2Q revenue, and we calculate that Services segment profit was $10.7 billion, which was four times higher than Product profits in 2Q21. In 3Q21, we anticipate that Services will outperform Product.”