AMZN is trading at $187.70 and the price has cleared a significant gap that occurred in August last year. The stock can see this as a base for further gains if the earnings are positive.
The big issue for Amazon in the coming quarters is a tariff threat to profit margins. As tariffs were reduced to a 10% flat rate, that can still eat into the company’s profit share on all of its products.
Oppenheimer cut its price target on the company by 15%, based on the tariff threat. Analysts revised their relatively bullish target price from $260 to $220. The company still has an outperform rating on the e-commerce firm.
Morgan Stanley analysts said recently that around 18% of products on Amazon are imported from China, while roughly 60% of third-party sellers on the platform have “some China exposure” that could affect advertising spending plans.
Despite tariffs, they expect investors to be pleased with mid- to high-teens growth at AWS, Amazon’s cloud computing platform, “even if margins contract meaningfully” on the e-commerce side.
Analysts expect Amazon to report around $155 billion in revenue on Thursday, up 8% year-over-year, according to consensus estimates. Profits are expected to be $14.7 billion, up 41% from a year ago.
Economic reports released this week will also be important to the outlook for Amazon shares. GDP growth figures will be released on Thursday for the US and the important NFP non farm payrolls data will come late on Friday.
That could boost the US share markets this week if tech earnings are positive and the economy shows some solid foundation after the recent turmoil.
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