Amazon Delivers Mixed Q4 Results Amid Higher Costs; Issues Guidance

Amazon (AMZN) delivered mixed-fourth quarter results characterized by an earnings beat and a revenue miss. Higher costs due to labor shortages and inflationary pressures remained a big headwind during the quarter and the year. AMZN shares fell 7.81% to close at $2,776.91 on February 3.

Amazon offers online retail shopping services. It also offers cloud computing services. Amazon’s upcoming earnings report for Q1 2022 is scheduled for April 28, 2022.

Amazon Earnings

Net sales in the fourth quarter were up 9% year-over-year to $137.4 billion, falling short of consensus estimates of $137.56 billion. Full-year net sales were up 22% year-over-year to $469.8 billion. Operating income in the fourth quarter fell to $3.5 billion compared to $6.9 billion delivered the same quarter of the previous year.

Net income in the fourth quarter increased to $14.3 billion compared to $7.2 billion delivered the same quarter last year. Diluted earnings per share, on the other hand, landed at $27.75, far better than consensus estimates of $3.58 a share. Full-year net income landed at $33.4 billion or $64.81 per diluted share.

Amazon expects net sales in the first quarter to range between $112 billion and $117 billion, representing 3% to 8% year-over-year growth. Operating income is expected to be between $3 billion and $6 billion compared to $8.9 billion in the first quarter of 2021.

Stock Rating

UBS analyst Lloyd Walmsley has reiterated a Buy rating on Amazon stock and cut the price target to $4,550 from $4,700, implying 63.85% upside potential to current levels. According to the analyst, faster growth and better margins could emerge towards mid-2022.

Consensus among analysts is a Strong Buy based on 21 Buys. The average Amazon price target of $4,190 implies 50.89%% upside potential to current levels.

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