Amazon shares touched a new all-time high Friday as investors reacted to a strong first-quarter earnings report that beat Street expectations on every metric.
For the quarter, Amazon posted sales of $108.5 billion, up 44% from a year ago and ahead of the company’s guidance range of $100 billion to $106 billion—the highest growth for any Amazon quarter in 10 years. Profits were $15.79 a share, more than triple the $5.01 a share reported a year ago, and beating the Street consensus view by 66%.
Amazon beat expectations in all of its most important businesses. The core stores business was up 40%, with third-party seller services up 60%. Amazon Web Services revenue accelerated to 32% growth from 28% in the December quarter. Advertising revenue, classified as “other,” continued to accelerate, growing 73% in the quarter – growth in the category has ratched up from 41% in the June quarter, to 49% in September and then 64% in December.
While the stock is up only modestly amid a broad market selloff on Friday, analysts this morning rushed to boost their price targets and profit estimates, and the day’s batch of post-earnings research notes were universally upbeat.
Evercore ISI analyst Mark Mahaney writes that Amazon reported “a clean beat and raise quarter, with very powerful fundamentals … revenue growth at massive scale marked no major deceleration despite a tougher comp and with record-high 9% operating margins.”
Mahaney notes that Amazon shares have been range-bound for over six months, after an 80% surge in mid-2020. “We believe these results prove that Amazon is emerging from Covid structurally stronger and that Amazon shares deserve to re-rate,” he writes, asserting that the stock could rally 25% or more over the next 12 months. Mahaney repeated his Outperform rating, raising his target to $4,500, from $4,000.
Morgan Stanley analyst Keith Weiss repeats his Overweight rating while upping his target price to $4,500, from $4,200. “Overall e-commerce trends are holding up better than expected, with Amazon talking about grocery numbers rising pre- and post-pandemic and the fact that they are still seeing strong engagement internationally,” he writes.
BofA Global Research analyst Justin Post reiterates his Buy rating, while lifting his target to $4,360, from $4,150, declaring Amazon “the one to own in e-commerce.” Post says the strong results and outlook suggests that Amazon’s 2021 revenues “could hold up better than peers,” and he adds that acceleration in AWS “will be a key stock driver in 2021. “He thinks the stock could move beyond his current target if regulatory pressures fade.
Canaccord Genuity analyst Michael Graham writes in a research note that the big question for Amazon shares is whether gains in e-commerce will persist and power through difficult comparisons in the next few quarters. But he adds that with the S&P’s return about triple that of Amazon shares over the last six months, “the market may have already priced in a potential deceleration … leaving room for the stock to work nicely from here.” He repeats his Buy rating, and ups his target to $4,400, from $4,100.
Amazon shares are up 1.3%, to $3,515.18; earlier in the session the stock traded as high as $3,553.39, a new all time intraday high.
Write to Eric J. Savitz at [email protected]
