After recent earnings and revenue forecasts fell short of expectations and the share price reacted accordingly (representing the largest one-day decline in over two years), numerous analysts have lowered their price targets for Amazon (NASDAQ: AMZN) stock over the next 12 months.
In fact, Amazon reported earnings of $1.26 per share, beating the $1.03 forecast, but failed to reach the expected revenue of $146.68 billion, bringing in $147.98 billion instead. Forecasted third-quarter earnings are between $154 billion and $158.5 billion, below the previously estimated $158.24 billion.
Price forecast for Amazon shares
Against this background, some stock market analysts have adjusted their price targets for Amazon shares, specifically downwards – including analysts from Redburn Atlantic, Daiwa Securities, President Capital, Morgan Stanley (NYSE: MS) and New Street Research.
In fact, analysts at Redburn Atlantic cut their price target for AMZN stock from $250 to $225, Daiwa Securities made a minor correction from $220 to $219, Resident Capital reduced it from $221 to $205, Morgan Stanley lowered it from $240 to $210, and New Street cut it from $245 to $225.
It is also important to note that despite lowering their AMZN price targets in line with recent developments, all analysts have maintained their Buy rating on Amazon stock and are currently TipRanks The data shows a “Strong Buy” consensus, along with an average price target of $223.58.
Amazon shares no longer “top pick”
Meanwhile, Morgan Stanley analysts led by Brian Nowak have removed Amazon stock from their “top picks.” In a recent client note, they described the results as “disappointing and complex,” highlighting concerns about Amazon’s retail business in particular:
“Overall, the mix shift toward lower average selling price and lower margin items (due to Amazon’s strong focus on consumer goods and everyday essentials and consumer trade-down/mix), combined with a slower than expected ramp up of high-margin advertising and cost optimization, is weighing on earnings more than we thought.”
On the other hand, Nowak believes that improvements in “cost-to-serve” metrics, or the efficiency of delivering products to customers and in the advertising business, will help Amazon offset the impact, at least in the long term, pointing out:
“In our view, Amazon must demonstrate the ability to deliver growth and profitability (…) even as its product mix continues to shift toward lower-margin items.”
Amazon share price analysis
Currently, Amazon stock is trading at $162.77, up 1.46% in premarket trading. However, the stock is still down 14% over the past week and has lost 18.33% on the monthly chart. According to data from August 8, the year-to-date gain has narrowed to 8.56%.
Amazon’s share price could also react negatively to the company’s $4 billion investment in artificial intelligence (AI) company Athropic coming under scrutiny from the UK competition authority, which recently confirmed it is conducting a formal investigation into its partnership with the company.
Ultimately, analysts remain firmly convinced that Amazon shares will recover in the future, provided they do not suffer long-term from current developments that many investors may perceive as negative. Regardless, it is important to do your own research when investing, as trends in the stock market can change.
Buy stocks now with eToro – trusted and advanced investment platform
Disclaimer: The content of this website does not constitute investment advice. Investments are speculative. When you invest, your capital is at risk.
