Amazon shares explode after stunning profit -- here's what 12 analysts are saying about it

Jeff BezosMike Segar/REUTERSCEO Jeff Bezos is having a good morning.

Amazon’s second-quarter earnings results shocked Wall Street.

The company reported revenues of $US23.18 billion, up 20% year-over-year and ahead of analysts’ consensus forecast for $US22.39 billion.

Earnings per share were $US0.19, while analysts had estimated a loss of $US0.14.

The big earnings beat was driven, in part, by Amazon Web Services, and Amazon’s third-party marketplace, although international sales growth was still nearly flat.

Following a surge after the results dropped on Thursday, the stock continues to rip higher and rose about 18% in premarket trading to as high as $US574.50. And with the stock’s spike, the company eclipsed Walmart by market capitalisation.

Many sell-side analysts have now raised their estimates for where they see Amazon’s share price in the next 12 months. And every research note we thumbed through was bullish on the company.

Here’s a quick wrap of what 12 analysts are saying.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.

Barclays: BULLISH


Price Target: $US700

Comment: 'For some time, we have believed that Amazon margins would grow slower than bullish expectations and had been concerned with a deceleration in revenue. Clearly, we have been too pessimistic on the near-term leverage in model as margins are expanding much faster than we thought. Just as impressive, the rebound in revenue growth outside the US and the remarkable Amazon Web Service (AWS) revenue growth in Q2 have both been a surprise and those trends appear sustainable, to us, over the next few quarters.'



Price Target: $US700

Comment: 'AMZN is winning in large Retail and Tech markets given long-term investments, per our proprietary data/analysis. We expect AMZN to be the #1 US Apparel retailer by '17 driven by accelerating purchaser growth and continue to gain traction in other retail verticals. AWS leadership in the fast-growing Public Cloud market will also continue.'

Bank of America Merrill Lynch: BULLISH

Rating: 'BUY'

Price Target: $US620

Comment: 'We continue to have a favourable view given: 1) Prime traction should drive strong Electronics and General Merchandise (EGM) revenue growth into the holidays; 2) Amazon Web Services (AWS) revenue and margin strength should drive higher multiples; 3) potential margin upside from AWS, 3P mix and fulfillment efficiency. We are increasing our PO to $US620 (from $US535) based on our sum-of-the-parts analysis that incorporates higher estimates and slightly higher segment multiples given 2Q acceleration.'

Wells Fargo: BULLISH


Price Target: $US533 - $US559 (valuation range)

Comment: 'We think Amazon is well positioned for share gains with the best customer experience in retail (lowest prices, best selection, best service) and substantial structural cost advantages.'

Credit Suisse: BULLISH


Price Target: $US700

Comment: 'As we believe Amazon will continue to reap margin benefits from fulfillment center (FC) maturation and shipping fee savings from its expanded footprint we reiterate that while investor focus continues to center on Amazon Web Services (AWS) reacceleration and strength in Electronic and General Merchandise (EGM), we would instead refocus on Amazon's expanding core retail gross profit on the ongoing benefits of FC maturation and growth of Prime membership.'

Jeffries: BULLISH

Rating: 'BUY'

Price Target: $US465

Comment: 'Electronics and other general merchandise (EGM) revenue increased +24% Y/Y to $US16.41B, above our $US15.92B and consensus at $US15.76B. We think EGM (especially in the US) is the best proxy for overall commerce growth for AMZN as it is generally a catch-all category for everything outside Media and growth here accelerated sequentially 2nd quarter in a row.'

Goldman Sachs: BULLISH

Rating: 'BUY'

Price Target: $US650

Comment: 'We believe this quarter is further evidence that Amazon's investment in infrastructure, logistics, and web services is accelerating market share gains, cash flow growth, and continued high returns on invested capital. Therefore, we remain Buy-rated (CL).'

Wedbush: 'BULLISH'


Price Target: $US700

Comment: 'We are raising our estimates to reflect a faster ramp in AWS profitability and more rapid retail sales growth than we expected previously. We are increasing our FY:15 revenue estimate to $US107 billion from $US105 billion, and our EPS estimate to $US1.36 from $US0.59 to reflect Q2 results and the high-end of Q3 guidance given recent performance.'


Rating: 'BUY'

Price Target: $US640

Comment: 'We had been concerned that rising operating costs would offset revenue generation. However, the company has demonstrated through the last two quarters an ability to drive high margin AWS revenue as well as better monetizing its geographic. Margins appear to be on the upswing, growth trends are holding, 3P mix is rising, and as a result we expect higher Free Cash Flow (FCF) generation from the company.'

Macquarie: BULLISH


Price Target: $US660

Comment: 'Great quarter, and more importantly, sustainable & fundamental strength in the two areas that matter most for Amazon: Prime and AWS. In some ways, Amazon is among the simplest stories we cover because these two areas are far and above the key. Everything else revolves around them. Going into the quarter, we were very bullish on the fundamental and competitive position of both businesses and now we are even more confident of their continued success.'

PiperJaffray: BULLISH


Price Target: $US650

Comment: ' YTD shares of AMZN are up 83% (using after hours prices), driven primarily by margin expansion and, while we believe this will be a multi-year theme, we believe the going forward catalyst will be the strength seen in unit growth. The set-up for this shift in investor focus is encouraging. Most investors thought Amazon's unit growth has been on a trajectory down to the low teens as the law of large numbers takes its toll; however, after the first unit growth acceleration since the Mar-12 quarter, we believe investors will increasingly focus on the top-line growth profile of Amazon. We note that this now makes Amazon a top-line acceleration + margin expansion story.'

Cantor Fitzgerald: BULLISH

Rating: 'BUY'

Price Target: $US670

Comment: 'While impossible to know for certain, we believe that Amazon is now starting to move away from the heavy build years for its e-commerce business just as its top line accelerates, yielding the beginnings of the much sought-after margin leverage. If sustained, we believe this trend could lead to Earnings Per Share (EPS) outperformance for several years to come.'

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