Amazon is about to look 'cheap': Analysts are doubling down on their bullish calls, even as the company's growth slows
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- Amazon shares fell on Friday after the company reported earnings Thursday evening.
- Amazon beat analysts' expectations for both quarterly profits and sales, but shares fell 4% in part because the company offered investors weak guidance.
- The results led at least five equity analysts across Wall Street to slash their price targets on the stock. They pointed to some slowing trends across the business
- However, analysts remained largely positive in the long run.
- Watch Amazon trade live here.
Amazon shares slipped after the company reported earnings on Thursday evening. The results forced even the most bullish Wall Street analysts covering the stock to acknowledge that growth is slowing across various segments.
The main issue for investors - who pushed the stock lower - seemed to be the weak sales guidance offered by the Jeff Bezos-led juggernaut, although Amazon did beat forecasts for quarterly profit and sales.
But while Amazon shares traded lower on Friday, analysts across Wall Street say the picture remains sunny. They're choosing to not get caught up in the quarter-by-quarter noise and focusing on longer-term growth, which many still believe is intact.
UBS analyst Eric Sheridan - who has a "buy" rating on the stock - was particularly positive. He thinks Amazon managed to climb over many of the "walls of worry" troubling investors, like slowing demand fears and overall rates of growth. Sheridan was specifically encouraged that revenue from Amazon Web Services grew 45% in one year.
Even areas where Amazon is slowing down are still up on a year-over-year basis. For instance, while North American revenue growth decelerated in the fourth quarter, that was still an 18% increase from a year ago. Subscriptions and advertising decelerated in the fourth-quarter, too, though analysts noted their respective growth rates over the past year remain relatively high.
The fact that Amazon's growth is broadly slowing - though still growing - speaks to how incremental e-commerce growth is becoming "somewhat more difficult and expensive," Morgan Stanley analysts said.
Amazon shares were trading roughly 4% lower on Friday, extending the after-hours move lower on Thursday. Since the stock's all-time high last September, it's fallen nearly 20%, placing the name on the brink of a technical bear market.
Here's a snapshot of what other Wall Street analysts are telling clients following Amazon's latest results.
- A $2.8 trillion investment chief at Bank of America reveals the worrying trend he thinks will define the next 20 years of investing - and explains how traders can still crush the market
- Amazon's minimum-wage hike barely made a dent in its operating costs, and it may explain why some workers say they're actually earning less
- Facebook thinks Amazon's ad business has officially become a threat
Instinet: "Shares Are About to Look 'Cheap': As Decelerating Sales Are Internalized, Profit Beats Begin to Impact Valuation, Go Figure"
Morgan Stanley: "Were 4Q Results Thesis-Changing? No."
Macquarie: "4Q'18: '19 Could be Challenging"
Citigroup: "Despite Recent Concerns, Q4 Results & Q1 Guide In-Line"
BMO Capital Markets: "Investment Up, but Margins Keep Expanding"
Credit Suisse: 'AWS Re-entering Investment Mode, Commerce Remains in Harvest Mode'
Oppenheimer: "Reducing Target to $1,975 on Lower Revenue Growth"
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