If history is anything to go by, Amazon’s (AMZN) Q3 earnings this afternoon should see an improvement on Q2’s display.
From 2002 to 2020, between the June and September quarters Amazon always posted quarter-over-quarter growth, suggesting to Wedbush’s Michael Pachter that seasonal trends “will allow the company to exceed its guidance once again.”
“With that said,” the analyst went on to add, “We expect the timing of this year’s Prime Day, which has historically taken place in Q3 from 2015 – 2019, to pose a headwind to top-line growth as the 48-hour sale took place in the June quarter instead of the usual September quarter.”
Nevertheless, just like last year when due to pandemic-led disruptions the ecommerce giant moved Prime Day to Q4 yet still bettered the high-end of its 3Q20 sales guidance by more than $3 billion, Pachter expects Amazon to deliver “outsized” Q3 results.
Pachter has the data to back up his stance calling for “elevated shopping levels.” A recent Wedbush survey found that 74% said they spent more on Amazon during the pandemic than in normal times – up from 72% when surveyed in May 2020. Additionally, over the three months leading up to September, 17% had signed up for an Amazon Prime subscription compared to only 15% in May 2020.
Pachter also thinks a “recovering economy” should drive better-than-expected results, abetted by “back-to-school shopping” following last year’s shift to online learning.
Lastly, while some of Amazon’s mega-cap peers are suffering at the hands of Apple’s recent privacy changes, Amazon will continue to benefit from the new rules, as advertisers “turn to a company that is able to track the behavior of over 200 million prime customers, including which ads they saw or clicked or purchased from, regardless of whether or not the user chose to opt into being tracked by Apple.”
With all this as backdrop, Pachter maintains an Outperform (i.e. Buy) rating on Amazon shares along with a $4,300 price target. The implication for investors? Upside of 24%. (To watch Pachter’s track record, click here)
None of Pachter’s colleagues see the next 12 months panning out any differently; all 31 Amazon reviews are positive, culminating in the stock’s Strong Buy consensus rating. The average price target sits just below Pachter’s; at $4,180.13, the figure suggests returns of 26% will be heading investors’ way in the year ahead. (See Amazon stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
