Reports Q2 2021 results on Thursday, July 29 after closing time
Expected Revenue: $115.33 Billion
EPS forecast: $12.24
When Amazon.com (NASDAQ:) reports its second quarter earnings later today, investors will focus on sales, which could show some slowdown after a breakneck pace during the pandemic.
Since the COVID-19 outbreak in March last year, Amazon sales have continued to exceed expectations as stay-at-home people increasingly make online purchases. But as the U.S. economy reopens and people begin to go back to their normal routines, there's a good chance that some of the sales will go back to brick-and-mortar stores.
At the end of the first quarter, however, there was no evidence that this trend was declining. The Seattle-based company reported in April that it was up 44%, with earnings reaching a record $15.79 a share, ahead of analysts' estimates. For the quarter ended June, Amazon forecast revenue between $110 billion and $116 billion.
Second quarter results likely benefited from the company's two-day Prime Day event in June, the company's retail bonanza for members of its $119-a-year fast shipping program. JPMorgan estimates that the event could bring in a total of $8.4 billion in Prime Day revenue this year, up 12% from last year's estimate.
In addition to Amazon's e-commerce business, the company's cloud computing and advertising business continues to show strong momentum. These units generate thicker margins than the retail business. Amazon Web Services revenue grew 32% in the first quarter, while advertising posted a 77% increase in revenue.
Amazon Stock Still A Buy
are up more than 12% this year, tracking the performance of the tech-heavy Index. The stock closed at $3,630.32 on Wednesday.
After this strong pandemic-era performance, analysts remain optimistic about the growth prospects of this e-commerce powerhouse, as they believe the company's sales momentum will continue through the reopening.
Several Wall Street analysts have recently raised their price targets for Amazon, citing a favorable environment for its business units. Telsey analysts reiterated their outperform assessment of the e-commerce giant ahead of the earnings report, saying Amazon has "superior execution."
According to the note:
"We maintain our sales and earnings estimates that are above consensus for the second quarter of 21, reflecting the continued favorable shift to online, strong business trends including Prime Day, market share gains across all categories and superior execution."
Of the 49 analysts surveyed by Investing.com, the average 12-month price target is $4,238.78.
That represents upside potential of 16% above the current share price.
Bottom Line
Amazon remains a solid position for long-term investors due to its leadership position in e-commerce. The factors that fueled the 2020 rally are still in play, given still low e-commerce penetration, expanded fulfillment capacity and the shift to cloud computing.
