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The moon and the stars are aligning for Amazon, this analyst says

Amazon analystAt least one analyst is super bullish on Amazon.

Amazon (Amazon News, Stock Quote, Chart NASDAQ:AMZN) is already up considerably in 2019 and has recently begun flirting with record highs. But with the e-commerce giant about to report its quarterly earnings this week the stock could really take off, if the Q2 buzz from certain experts is to be believed.

Earnings season has so far turned out a number of success stories, with companies ranging from Kimberly-Clark to Coca-Cola raising their guidance for upcoming quarters. The news bodes well for markets which had expected a slowdown in growth.

“The earnings are coming in slightly better and certainly slightly better than they had been and that’s a big surprise —everybody thought flat to down a little,” said Art Cashin of UBS Financial Services to CNBC on Tuesday.

“The more important thing is the next quarter: things are going to still be a little better, so the outlook being better is really surprising. If they’re raising expectations, they certainly intend to meet them.”

Amazon, which reports its second quarter financials on Thursday, got two big votes of confidence earlier this week when both Deutsche Bank and KeyBanc Capital Markets raised their price targets on the stock, now calling for 28-per-cent and seven-per-cent returns, respectively, over the next 12 months on expectations of strong revenue growth and margin expansion.

Cashin says Amazon may follow other big tech companies in growing its cloud services numbers.

“There is some hope here that because all the other cloud-based guys are doing well that Amazon may show blowout numbers. That’s keeping the pseudo-tech area all moving,” Cashin says.

Craig Johnson, a senior analyst with Piper Jaffray, says that along with strong fundamentals, Amazon is looking good from a technical perspective.

“When I look at the longer-term chart on Amazon and we look at the big consolidation range that we’ve been seeing in this chart from about $1360 to about $2030, if I was to measure this particular base out, you could be looking at a move toward $2700,” Johnson said to CNBC on Monday. “From our perspective, the moon and stars seem to be aligning here both technically and fundamentally.”

Amazon impressed in its last earnings report in April, matching analysts’ expectations on revenue with $59.7 billion and recording a strong beat on earnings with EPS of $7.09 per share versus the expected $4.72 per share. For Amazon’s second quarter, analysts are calling for revenue of $62.5 billion and adjusted EPS of $5.58 per share, representing growth of 18.1 per cent and 10.1 per cent, respectively.

Disclosure: Cantech’s Nick Waddell owns shares of Amazon

About The Author /

Jayson MacLean
Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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