After recent earnings and revenue projections fell short of expectations, and price reacted accordingly, marking the largest one-day decline in over two years, a number of analysts have lowered their price targets for Amazon (NASDAQ: AMZN) stock in the next 12 months.
Indeed, Amazon reported earnings of $1.26 per share, beating the predicted $1.03, but failed to meet the expected revenue of $146.68 billion, instead delivering $147.98 billion and projecting the third quarter profit between $154 billion and $158.5 billion, below the previously estimated $158.24 billion.
Amazon stock price prediction
In this context, some stock market analysts have adjusted their Amazon stock price targets, specifically downgrading them – including those from Redburn Atlantic, Daiwa Securities, President Capital, Morgan Stanley (NYSE: MS), and New Street Research.
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As it happens, analysts from Redburn Atlantic reduced their AMZN stock price target to $225 from $250, Daiwa Securities made a minor correction from $220 to $219, Resident Capital reduced it from $221 to $205, Morgan Stanley decreased it from $240 to $210, while New Street clipped it from $245 to $225.
It is also important to note that, despite lowering their AMZN share price targets in line with the recent developments, all of these analysts have maintained their ‘buy’ recommendation on the Amazon stock, and current TipRanks data shows the ‘strong buy’ consensus, alongside the average price target of $223.58.
Amazon stock no longer ‘Top Pick’
Meanwhile, Morgan Stanley analysts, led by Brian Nowak, have removed Amazon stock as its ‘Top Pick,’ citing results they referred to as “disappointing and multi-faceted” in a recent client note, highlighting particular concerns with Amazon’s retail operations:
“Big picture, the mix shift toward lower average selling price and lower margin items (due to both Amazon’s heavy consumables and everyday essentials focus, as well as consumer trade-down/mix), combined with a slower than expected ramp in high-margin advertising and cost to serve improvements is weighing on profits more than we thought.”
On the other hand, Nowak believes that improvements in its ‘cost-to-serve’ metrics, or its efficacy in delivering products to customers, and advertising business will help Amazon offset the impact, at least in the longer term, pointing out that:
“In our view, Amazon needs to demonstrate an ability to deliver growth and profitability (…) even as its product mix continues to shift toward lower margin items.”
Amazon stock price analysis
For the time being, the price of Amazon stock stands at $162.77, recording an increase of 1.46% in pre-market but still losing 14% across the past week and adding up to the loss of 18.33% on its monthly chart, having reduced its year-to-date (YTD) gains to 8.56%, as per data on August 8.
Elsewhere, the price of Amazon stock could also react negatively to the company’s $4 billion investment in artificial intelligence (AI) firm Athropic having come under the scrutiny of the United Kingdom’s antitrust regulator, which has recently confirmed it was carrying out a formal investigation of their partnership.
Ultimately, analysts remain firm believers in the future price recovery of Amazon stocks, provided it does not suffer long-term from the current developments that many investors might perceive as negative. Regardless, doing one’s own research is critical when investing, as trends in the stock market can shift.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
