Tech giant Amazon (NASDAQ:AMZN) will report its Q2 earnings on Thursday, August 3. Improving market sentiment, led by moderation in inflation and an expected stabilization in interest rates, could drive consumer spending, leading to improved earnings. However, given the recent run in AMZN stock, the upside potential remains capped even with a solid Q2 beat, noted Wedbush analyst Michael Pachter.
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Pachter reiterated a Buy on Amazon stock ahead of Q2 earnings. The analyst expects the company to benefit from the uptick in macro sentiment. He added that Amazon is exposed to consumer (via e-commerce and physical stores) and corporate (through AWS and advertising) spending. Thus, it is well-positioned to benefit from an improvement in “consumer confidence.”
Pachter expects Amazon to deliver strong Q2 results and provide solid Q3 guidance. However, his “share price appreciation expectations are capped” due to the strong recovery in Amazon stock so far this year. It’s worth highlighting that Amazon stock has gained about 57% year-to-date. During the same period, the NASDAQ 100 Index (NDX) and the S&P 500 Index (SPX) were up about 44% and 19%, respectively.
With Pachter expecting AMZN’s Q2 earnings to impress investors, let’s delve into analysts’ consensus estimates.
Here’s What Consensus Estimates Indicate
Wall Street expects Amazon to post revenue of $131.49 billion, up from $121.23 billion in the prior-year quarter. Further, its top line is also likely to improve on a sequential basis.
Its revenue will likely benefit from the uptick in the macro environment, which will drive consumer spending. Further, the strength in the cloud and advertising businesses will support top-line growth.
Further, the company’s focus on reducing costs across all businesses will cushion its bottom line. Analysts expect Amazon to post earnings of $0.35 a share in Q2, compared to a loss of 0.2 per share in the prior-year quarter. Moreover, the company’s EPS is projected to increase on a quarter-over-quarter basis.
Monness analyst Brian White expects Amazon to deliver a 9% year-over-year increase in sales and surpass Street’s estimates in Q2. Further, the analyst expects Amazon’s bottom line to handily exceed analysts’ consensus estimates and reach $0.41 a share. The analyst is bullish about the stock and reiterated a Buy rating on July 25.
Is Amazon Stock a Buy, Sell, or Hold Today?
With 29 unanimous Buy recommendations, Amazon stock is a Strong Buy on TipRanks. These analysts’ average price target of $152.52 implies 15.82% upside potential from current levels.
Options Activity Highlights 6.66% Earnings-Related Move
While analysts are bullish about Amazon stock ahead of Q2 earnings, option traders are pricing in a 6.66% move on earnings, which is greater than the previous quarter’s earnings-related move of -3.98% and the average -2.98% move in the last eight quarters.
Learn more about TipRanks’ option tool here.
