Wall Street analysts are bullish on Amazon heading into earnings. The e-commerce giant is set to report after the bell Thursday. Analysts polled by StreetAccount expect second-quarter revenue to come in at $131.49 billion, compared to the company’s earlier guidance of $127 billion to $133 billion, and earnings per share of 35 cents. The consensus on operating income is $4.78 billion, versus the company’s guidance of $2 billion to $5.5 billion, per StreetAccount. Investors will be paying close attention to what the company has to say about its retail and cloud services businesses for the quarter, as well as what it expects for the rest of the year. Just a few weeks ago, Amazon said its July Prime Day was the “single largest sales day in company history.” Here’s how several analysts are trading Amazon ahead of its latest earnings report. Morgan Stanley analyst Brian Nowak thinks Wall Street is underappreciating the profit flow-through from fulfillment and shipping cost efficiencies. “We are ~13%/14% ahead of street 2Q/2023 EBIT and expect upward revisions to street EBIT numbers following the 2Q print driven by shipping and fulfillment cost per unit efficiencies as AMZN reaps the benefits of its regional fulfillment network which it rolled out in 1Q23,” he wrote in a note last week. That is coupled with a more durable consumer and a potential reacceleration of Amazon Web Services revenue in the third quarter/second half of 2023, he added. “We see room for upside driven by both multiple appreciation and earnings revisions,” Nowak said. His price target of $150 suggests 17% upside from Wednesday’s close. AMZN YTD mountain Amazon year to date UBS is below consensus on Amazon’s cloud computing services for the second quarter but anticipates a reacceleration in the business in the second half, analyst Lloyd Walmsley wrote in a July 19 note. The company remains one of his top picks. “We think the shape here (2H accel) is more important than where things bottom in 2Q and (+) commentary can drive shares higher,” he said. Meanwhile, retail margins should benefit from falling fuel and shipping prices, Walmsley said. He also has a $150 price target. Bank of America is also bullish, maintaining its buy rating and $154 price target into earnings, which suggests roughly 20% upside. “Tough 2Q comp set up for AWS vs. Azure is a trading risk (MSFT reports 7/25), but we think positive could be AWS growth is nearing a bottom in July (easing comps),” analyst Justin Post wrote in a July 19 note. He also thinks Amazon’s second-quarter retail revenue is on track to meet or beat estimates and said early third-quarter and Prime Day commentary suggest a strong start to the current quarter. Evercore ISI analyst Mark Mahaney’s expectations for second-quarter revenue and operating income is in-line with the Street’s consensus. Amazon remains one of his top picks due to a recovery in retail margins, retail sales and AWS growth, he wrote in a note Sunday. “We continue to see an attractive set-up on the stock based on our Triple Trough Thesis (trough multiple, trough margin, and trough revenue growth). Three factors could drive a definitive unlock on AMZN shares,” he said. Mahaney also has a $150 price target on the stock. Lastly, Citi is expecting revenue and operating income expenses to be in-line or better than consensus expectations. On Monday, the firm reiterated its buy rating and $145 price target, which suggests 13% upside from Wednesday’s close. — CNBC’s Michael Bloom contributed reporting.
