Here’s what Wall Street is saying about Amazon ahead of earnings

Amazon (AMZN) is scheduled to report results of its second quarter of 2024 after the market close on Thursday, July 1, with a conference call scheduled for 5:30 pm ET. Here’s what to watch for:

EXPECTATIONS: During the company’s last earnings call, Amazon said it saw Q2 revenue between $144B-$149B, and Q2 net sales between $144.0B and $149.0B, or to grow between 7% and 11% compared with second quarter 2023. The guidance anticipated an unfavorable impact of approximately 60 basis points from foreign exchange rates. Current consensus EPS and revenue forecasts for Amazon’s June-end quarter stand at $1.03 and 148.56B, respectively.

ATTENTION ON NBA DEAL: On Tuesday, UBS raised the firm’s price target on Amazon.com to $224 from $217 and kept a Buy rating on the shares ahead of the Q2 results. UBS thinks the time is approaching for the company to start showing more of its aggression and enter an investment cycle, and while the recent $1.8B per year licensing deal with the NBA will likely capture the most attention, the step-up in CapEx for AWS, alongside what it may look to do in groceries and Internet access will likely be more meaningful over time.

Morgan Stanley also raised the firm’s price target on Amazon.com to $240 from $220, while keeping an Overweight rating on the shares. The firm previewed Q2 EPS for the North American Internet group, stating that Amazon remains its top mega cap pick, while moving down the cap size it is most bullish on Uber (UBER), DoorDash (DASH), Trade Desk (TTD) and eBay (EBAY) and remains more cautious on online travel names and Etsy (ETSY).

REMOVED FROM ‘TACTICAL UNDERPERFORM’: Earlier this week, Evercore ISI removed Amazon from the firm’s “Tactical Underperform” list ahead of earnings as it sees “a Modest Beat & Bracket quarter as the most likely outcome” for the company’s Q2 report. The firm believes revenue and operating income upside is likely for Q2, but also sees “limited upside, but not downside risk,” to Q3 revenue and operating income estimates, Evercore has an Outperform rating and $225 price target on Amazon shares.

AD BUSINESS: Keeping a Buy rating and $225 price target on Amazon.com, Loop Capital noted that the firm is increasingly bullish on the growth runway for Amazon’s advertising business that it sees extending well beyond sponsored listings into CTV, audio ads and across the open internet. The company offers fundamental advantages, especially with unparalleled shopper data, while changes in the ad ecosystem are amplifying its differentiation, and Amazon Ads could achieve $150B in revenue before the end of the decade from $47B last year, the firm told investors in a research note.

Bernstein raised the firm’s price target on Amazon.com to $215 from $210 late last month, maintaining an Outperform rating on the shares. While the stock hasn’t seen an AI “pop” like some peers, it’s up +20% year-to-date, the firm notes. Bernstein has recently lowered its AWS estimates for the quarter, though sees the business as a coiled spring into the second half of the year. Similarly, the firm expects to see advertising accelerating into the second half of the year as Prime Video ads scale. Bernstein is a buyer of the second half of the year story, though expectations are high into the quarter.

NBA AGREEMENT: Late last month, The NBA said in a statement that Warner Bros. Discovery’s (WBD) most recent proposal did not match the terms of Amazon Prime Video’s offer and, therefore, the NBA has entered into a long-term arrangement with Amazon. The new arrangement with Amazon supports its goals by complementing the broadcast, cable, and streaming packages that are already part of its new Disney (DIS) and NBCUniversal (CMCSA) arrangements. All three partners have also committed substantial resources to promote the league and enhance the fan experience, the NBA said.

SENTIMENT: Check out recent Media Buzz Sentiment on Amazon as measured by TipRanks.