The Q2 Earnings season might be kicking into action, but before Amazon (AMZN) delivers the quarter’s financial report, it has another big event to attend to. This week, the ecommerce giant’s annual shopping extravaganza takes place.
Shifting back from 2021’s mid-June slot to the usual mid-July window, the 8th annual Prime Day happens this week on July 12-13 (Tuesday/Wednesday).
The 48-hour event is set to include millions of deals and covers 20 countries, with an anticipated focus on summer and back-to-school shopping. J.P. Morgan’s Doug Anmuth expects the event to “drive incremental revenue” of ~$3.8 billion, a 7% year-over-year increase on the ~$3.6 billion of incremental revenue generated at last year’s 2Q21 Prime Day.
“Importantly,” says the 5-star analyst, “over the past 2 years AMZN has doubled its fulfillment & distribution network, & nearly doubled its workforce to ~1.6M employees. Therefore, AMZN should be well prepared for the elevated demand of Prime Day & the event should help AMZN leverage some of its excess capacity.”
Anmuth also believes delivery speeds are almost at or have even exceeded early 2020 levels and reckons well over 50%+ of packages are being delivered from the company’s fulfillment centers, thereby diminishing its reliance on third-party shippers.
In total, Anmuth expects Prime Day revenue will reach ~$5.6 billion. Yet, in anticipation of a “more muted benefit” from the 2-day event on account of the difficult macro environment, this represents slower growth in incremental Prime Day revenue. In general, this is also why Anmuth thinks this year’s Prime Day seems to have “less hype going in than previous years.”
Nevertheless, despite the challenging macro backdrop, Anmuth still considers Amazon his “Best Idea” and sticks with an Overweight (i.e., Buy) rating and $175 price target. Should the figure be met, investors will be sitting on returns of ~57%. (To watch Anmuth’s track record, click here)
That objective is just a touch under the Street’s average target, which stands at $178.55 and makes room for one-year gains of ~60%. Of the 39 AMZN reviews made during the past 3 months, one recommends sitting this one out, but all the rest are positive, making the consensus view here a Strong Buy. (See Amazon stock forecast on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.