Amazon (AMZN) Smashes Earnings Expectations

Amazon (NASDAQ: AMZN) shares gained more than 3% in extended trading Thursday and hit a new all-time high the following day as investors reacted to the e-commerce giant’s strong Q1 earnings report that blew past Wall Street analysts’ expectations on every metric.

For the quarter, Amazon posted adjusted net sales of $108.5 billion, compared with $75.5 billion in Q1 2020, beating the Street’s estimates of $104.5 billion. The Q121 marks Amazon’s highest quarterly growth in the last 10 years. Earnings per share (EPS) were also strong, coming in at a record $15.79 per share versus $9.54 per share expected. EPS, which surpassed the Street consensus view by nearly 70%, more than tripled on a year-over-year (y/y) basis.

More importantly, Amazon said it beat expectations in all of its most important business metrics.

The North America segment net sales jumped 39% y/y to $64.4 billion from $46.1 billion while international sales soared 50% y/y to $30.6 billion from $19.1 billion. Additionally, Amazon’s cloud-computing business saw its net sales jump 32% y/y to $13.5 billion. Amazon doesn’t disclose advertising sales, but the figures are included in the company’s “Other” category, which saw its revenue increase 77% from $3.9 billion a year earlier to $6.9 billion.

Guidance

For the second quarter 2021, the company provided sales forecast that were stronger than projections. Net sales are expected to be between $110 billion and $116 billion, versus forecasts of $108.7 billion. This would represent y/y growth of between 24% and 30%.

Target Price Boost

Wall Street was widely positive on Amazon’s results, with several analysts rushing to boost their price targets.

Robert W. Baird’s Colin Sebastian reiterated his AMZN ‘Buy’ rating and a price target of $4,000. Morgan Stanley’s Keith Weiss was in the same camp, repeating his ‘Overweight’ rating while increasing the name’s target price to $4,500, from $4,200. After reiterating his ‘Outperform’ rating on the shares of the e-commerce giant, Evercore’s Mark Mahaney raised his AMZN target to $4,500, from $4,000. Meanwhile, Susquehanna Financial Group raised its price target to a Street-high view of $5,500, 59% upside potential.

Price Action

Amazon shares closed $3.89 lower at $3,467.42 on Friday. The $1.75 trillion market cap company trades in a 52-week range of $2,256.38 – $3,553.39.

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