Analysts certainly didn’t see a massive earnings beat like this for Amazon’s quarterly report after Thursday’s closing bell.
Helped by strong holiday sales, Amazon.com Inc. (Nasdaq: AMZN) blew the doors off analysts’ estimates — by more than $2 a share.
That sent shares of the e-commerce giant soaring by nearly 11% in premarket trading Friday.
Its steady rise since 2002 is attributed to a philosophy of consistent market expansion.
“AMZN is an example of (Warren) Buffett’s advice to invest like Wayne Gretzky and skate to where the puck is,” Banyan Hill Publishing analyst Michael Carr said. “Amazon famously started as a book seller and Bezos saw the opportunity for Amazon Web Services, the marketplace, advertising, a delivery fleet and other services that created a trillion-dollar company.”
That philosophy is also what makes Amazon a company for investors to buy.
Amazon Quarterly Report: What It Said
The company reported earnings per share of $6.47 compared to Wall Street expectations of $4.04 — a colossal 62% beat.
Amazon’s revenue in the fourth quarter was $87.4 billion — also well above analysts’ expectations of $86 billion.
Despite quarterly shipping costs jumping 43% year over year, Amazon spent less than the $1.5 billion it projected for its quicker delivery system.
Amazon’s quarterly report sent its market capitalization back above $1 trillion for the first time since 2018, when it then pulled back after its stock underperformed the larger market.
Amazon’s Prime membership numbers jumped to 150 million subscribers and its AWS cloud division saw its revenue hit $9.9 billion — a 34% jump over the same period a year ago.
Here’s What All of That Means
On Friday, following Amazon’s quarterly report, analysts around Wall Street scrambled to either reiterate price targets or even raise them.
Analysts with JPMorgan & Chase raised its price target to $2,200-$2,525 while Morgan Stanley upped its target price to between $2,200 and $2,400. Both brokerages have Amazon’s shares rated at “overweight.”
Barclays and Goldman Sachs have the company rated at a “buy.”
Consider that from a price of $35.03 a share in November 2008 to Friday morning, Amazon stock has jumped 5,240%. While there have been a few bumps in the road, the rise has been fairly steady.
Amazon’s price to sales is 3.5 and its price to book is 16.4. Both technical fundamentals hold the company from being overvalued. That makes Amazon a good buy — if you can afford it at $2,000-plus a share now.
That could be its biggest drawback. Amazon’s share price after Thursday’s close was $1,870.68. So it is expensive, but it is still a buy.
“As long as Bezos is waiting for the puck to reach him and earnings growth is well above average,” Carr said, “this is a great company and a great stock.”