Amazon Analysts Raise Price Targets on Big Earnings Beat: What Wall Street's Saying

Amazon's earnings beat was driven by high volumes of one-day and same-day delivery, while costs stabilized.
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Amazon AMZN shares spiked after the e-commerce giant reported better-than-expected revenue and earnings for the fourth quarter, driven by strength in one-day and same-day shipping. Several analysts raised their price targets following the results. 

The stock rose 9.4% to $2,045.48 a share on Friday morning, taking Amazon's market cap past a trillion dollars for the first time since 2018. 

Amazon posted earnings of $6.47 a share, beating estimates of $4.04. Total revenue rose 21% to $87.4 billion, beating analyst expectations of $86.03 billion.

“More people joined Prime this quarter than ever before, and we now have over 150 million paid Prime members around the world,” CEO Jeff Bezos said in a statement. “We’ve made Prime delivery faster -- the number of items delivered to U.S. customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year.”

In addition, Amazon Web Services revenue was $9.95 billion, beating expectations of $9.815 billion and rising 34%, even as some see Microsoft  (MSFT) - Get Report eating into Amazon’s cloud market share. 

Here's what analysts were saying:

Credit Suisse, Outperform, Price Target Raised From $2,100 to $2,400 

"Investment case: revenue growing into the higher expense base. All of the investor questions around return on invested capital were answered on this result, as accelerating unit growth of 22% year-over-year (vs 22% in 3Q20 19, 14% in 4Q 2018) provided the rationale for 1-day -related step up in shipping/fulfillment costs. As we attribute much of the AMZN shares’ underperformance relative to its megacap Internet peers over the trailing twelve months to these open questions, we expect the stock to outperform once again as capital rotates back in. We increase our estimates for the following segments for 1Q 2020 and 2020: North America third-party gross merchandise volume, advertising, and AWS."

- Stephen Ju 

JPMorgan, Overweight, Price Target Raised From $2,200 to $2,525 

"Overall, in our view AMZN’s ability to re-accelerate revenue growth at such a large scale is evidence that its prime one-day investments are paying off. Investor concern surrounding AWS was elevated into earnings, specifically related to revenue deceleration, where some feared less than 30% growth. Those fears were assuaged. Also of note is AWS’ $30 billion backlog, which is up 54% year-over-year. We expect AMZN to resume operating income margin leverage in 2Q, and we are increasing our 2020 operating income margin estimate from 5.4% to 5.6%."

-Doug Anmuth

Morgan Stanley, Overweight, Price Target Raised From $2,200 to $2,400 

"AMZN's 1-day retail and AWS investments from 2019 are blooming... and driving faster growth and profitability while also extending AMZN's ability to invest in new businesses. Even more bullish, 1-day is also driving faster fulfillment by Amazon adoption...another incremental revenue stream to fuel AMZN's profits and ability to invest to attack new markets (more 1-day,grocery, logistics,healthcare,apparel, international,etc). AMZN's AWS sales force investments over the past year are also yielding results with faster growth and higher profitability. Our 2020/2021 company-wide EBIT rises by 21%/10% ($3.7 billion/$3.0 billion)." 

- Brian Nowak  

RBC Capital Markets, Outperform, Price Target Raised From $2,500 to $2,700 

"All in, [fundamentals] were reasonably solid. Very strong advertising revenue growth: per management commentary, ad revenue year-over-year growth in Q4 matched Q3; we estimate close to 50% – this is very impressive on a $12 billion plus run rate. 2020 Revenue up 1% to $336 billion and operating income raised 4% to $19 billion. $2,700 price target is based on 20 times 2021 EBITDA of $65 billion, supported by 25% 3-year EBITDA compound annual growth rate." 

- Mark Mahaney