What Analysts Have to Say About Amazon After Earnings

By Chris Lange Published Jul 24, 10:35AM EDT

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Analysts are beginning to weigh in on Amazon.com Inc. (NASDAQ: AMZN) after it reported second-quarter 2015 results after markets closed on Thursday afternoon. The online retailer posted diluted earnings per share (EPS) of $0.19 and revenues of $23.18 billion. In the same period a year ago, the company reported a net loss of $0.27 on revenues of $19.34 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates calling for a loss of $0.14 and $22.39 billion in revenues.

Other comparisons are staggering: an operating profit of $464 million compared with an operating loss of $15 million in the year-ago quarter; operating cash flow for the trailing 12 months $8.96 billion compared with $5.33 billion for the same period a year ago; and free cash flow for the trailing 12 months of $4.37 billion compared with $1.04 billion at the same time a year ago.

Merrill Lynch reiterated a Buy rating and raised its price target to $620 from $535. The second quarter was highlighted by EPS and revenue upside, and accelerating global EGM, AWS, gross profit and unit growth. AWS was very strong at up 81% and set up to drive 170 basis points improvement gross margins and $900 million in CSOI growth in 2016.

S&P Capital IQ raised Amazon to Buy from Hold and lifted its 12-month target price to $650. The firm also raised its 2015 and 2016 EPS estimates to $1.60 and $3.70, respectively.

Wells Fargo reiterated an Outperform rating with a valuation range of $533 to $559, based on slightly higher multiple assumptions in a sum of the parts analysis.

After exceptional second-quarter results on revenue and margins, Oppenheimer raised its target on Amazon to $640 from $525, while maintaining an Outperform rating.

Canaccord Genuity noted that the second quarter was solid with top-line momentum complemented by cost efficiencies. The firm raised its price target to $525 from $400. The firm’s analyst Michael Graham said:

Amazon’s second quarter results were strong, with CSOI margin reaching the highest point in 4 years (4.6%) and CSOI dollars hitting the highest point ever ($1.1B). Revenue also exceeded expectations on nearly every line, with a notable 16% beat on AWS revenue. The CSOI margin beat vs. consensus was driven 56% by North America, 13% by International, and 30% by AWS. Management called out AWS usage, Prime membership expansion, and FBA growth as notable top-line drivers. On the bottom-line, cost efficiencies from process improvements, fixed asset leverage, and a greater focus on software and algorithms led to greater-than-expected profitability and 100%+ EPS growth. Even though management guided Q3 margins down sequentially, it appears our caution around margin expansion is unwarranted, and we are raising our EPS estimates accordingly. We are therefore more favorably inclined on fundamentals, while we find the valuation less attractive currently.

Other analysts had this to say:

Amazon was raised to Overweight from Equal Weight at Barclays with a $700 price target.
The firm B. Riley raised its rating to Buy and raised its target price to $646 from $428.
Nomura reiterated its Buy rating and raised its target to $700 from $500.
Cantor Fitzgerald reiterated its Buy rating and raised its target to $670 from $460.
CLSA reiterated an Outperform rating with a $500 target.
Credit Suisse raised its price target to $700 from $480.
Jefferies has a Buy rating and raised its price target to $730 from $465.
Morgan Stanley has an Overweight rating and raised its price target to $740 from $520.
RBC has an Outperform rating and raised its price target to $650 from $500.
Wedbush reiterated a Buy rating with a $700 price target.

Shares of Amazon were up 19.5% at $576.00 just after Friday’s opening bell. The stock has a consensus analyst price target of $498.42 and a 52-week trading range of $284.00 to $580.57.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.