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Amazon in prime position among Wall Street analysts after stellar 2Q earnings performance

Goldman Sachs, Wedbush and UBS analysts raise price targets on the e-tailer after smashing profit expectations

Amazon building
The e-commerce giant reported record 2Q net income of US$2.5bn, delighting Wall Street analysts

Amazon.com (NASDAQ:AMZN) is in prime position among Wall Street analysts who rushed to raise their price target after posting stellar second-quarter earnings and profitability.

The e-commerce giant reported record net income of US$2.5bn, or earnings of US$5.07 per share, on revenue of US$52.89bn compared with US$0.40 EPS on revenue of US$37.96bn at the same time a year earlier.

But it narrowly missed out on revenue estimates after reporting US$52.9bn versus the estimate of US$53.41bn.

Shares in Amazon jumped 4% in the pre-market, and added $2.6% to US$1,850.63 in the regular session.

READ: Amazon crushes 2Q analyst earnings estimates but falls short on revenue

Goldman Sachs analyst Heath P. Terry gave the shares a Buy rating and raised his firm’s price target to US$2,300 from US$2,100.

He was encouraged that Amazon’s second-quarter profit was well above consensus forecasts due to expanding margins helped by its cloud computing business, Amazon Web Services, or AWS.

“We continue to believe that we are in the sweet spot between Amazon investment cycles where new fulfillment data centers are driving accelerating growth while incremental capacity utilization and efficiency is driving margin expansion,” Terry wrote in the note.

Oppenheimer analyst Jason Helfstein, meanwhile, also put out a bullish recommendation and raised his firm's price target to US$2,130 from US$1,750 while sticking to an Outperform rating on the shares.

While Amazon's international revenue in the third quarter could face headwinds due to foreign-exchange, "the magnitude of the operating income/margin beats relative to slower revenue gives us confidence the stock can continue to work", Helfstein wrote in a note to investors. 

UBS analyst Eric J. Sheridan also signaled an optimistic tone and gave the shares a Buy rating while raising the firm’s price target to US$2,150 from US$1,830.

Sheridan wrote that while some investors could focus on slower paid unit growth and little to no upside, the negative points were "overwhelmed" by a better margin profile and cloud services. He added that it painted a picture of sustained growth in e-commerce, AWS and advertising.

Finally, Wedbush’s Michael Pachter gave the e-tailer an Outperform rating, raising its price target to US$2,100 from US$1,808.

“Amazon’s Q2 performance gives us great confidence in the company’s ability to reach our EBITDA estimate of nearly $35 billion for fiscal year 2019, up from $26.5 billion this year and $15.6 billion last year,” he wrote in the note.

--Written by Belinda Robinson for Proactive Investors

Quick facts: Amazon.com, Inc.

Price: 3095.13 USD

Market: NASDAQ
Market Cap: $1.55 trillion

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