Amazon stock edged up Thursday, as Wall Street analysts are increasingly bullish on the e-commerce giant ahead of earnings next week.
On the stock market today, shares for Amazon climbed as much 3% in heavy volume during early trading. Those gains eased back in the afternoon, with Amazon stock closing up less than a half-percent on the day, at 128.35.
Amazon reports earnings next Thursday. Earnings previews from analysts have been largely positive in the lead-up to the report.
Amazon Stock A Top Pick
A new research report from Oppenheimer called Amazon a top pick heading into 2024. Analyst Jason Helfstein said the company has exposure to affluent consumers, advertising opportunities and "significant potential for e-commerce margin improvement."
Shares for Amazon have also recently underperformed compared to Alphabet and Meta, the Oppenheimer report notes.
Helfstein reiterated an outperform rating for Amazon stock and set a 12 to 18 month price target of 170.
Further, D.A. Davidson analyst Tom Forte reiterated a buy rating for Amazon stock, with a price target of 150. While he believes consumers are spending more on travel and live events than discretionary items, he noted some encouraging signs for Amazon's retail business.
"First off, we were encouraged by its robust seasonal hiring plans of (250,000) employees for the holidays, up from (150,000) last year," Forte wrote. "Second, the company has already indicated its Prime Big Deal Days in October — held for only the second time in its history — outpaced last year's event."
Similarly, Wedbush analyst Scott Devitt reiterated an outperform rating for Amazon stock with a 12-month price target of 180.
"We think the company is broadly better positioned than investors fear, and we see catalysts ahead as retail margins continue to rise and AWS (Amazon Web Services) growth accelerates against easing comps," Devitt wrote in an Oct. 18 client note.
Caution On Cloud Business
Stock watchers have been cautious around Amazon's AWS cloud-services business. The division is a crucial profit driver for Amazon, but it has seen sales growth slow amid a cool-down for software spending by businesses in the past year.
UBS, for instance, rates Amazon stock a buy overall with a 178 price target. But analyst Lloyd Walmsley lowered that target slightly earlier this week, citing potential short-term headwinds for cloud revenue.
Amazon stock has gained 56% this year but is scuffling heading into earnings. Wedbush's Devitt noted that Amazon stock has lost about 5.8% since the day after its Q2 earnings, Aug. 4, compared to a 2.7% fall for the Nasdaq composite and a 1.8% rise for megacap tech stocks.
Amazon has grappled with concerns about the cloud business, as well as about competition from Chinese e-commerce companies and the Federal Trade Commission's antitrust suit.
Earnings next week offer a chance to answer some of those concerns. Analysts polled by FactSet project the company will report earnings of 58 cents per share on revenue of $141.5 billion. Year over year, that's an earnings increase of 107% and a sales increase of 11.3%.
Wall Street is positive on Amazon stock overall. Of the 54 Amazon stock analysts following the company, 94% hold a buy rating, according to FactSet.
