Every single analyst who rates the stock recommends clients buy it. Active fund managers “are even more overweight” the name now than they were a year ago, per a Bank of America report on Aug. 10.
Yet, that persuasive bullishness is being put to the test as last month’s unexpectedly weak sales forecast complicates the company’s growth narrative. Shares fell 0.4% on Thursday. Earlier this week, the stock closed below its 200-day moving average for the first time since June, and it is now lower than where it started the year.
The company’s reported plan to open several large department-store-like locations in the U.S. doesn’t appear to be the news that will turn the stock around. The Wall Street Journal’s report was based on unnamed people familiar with the matter.
Amazon’s poor performance stands out among U.S. companies valued at more than $1 trillion, as well as the market as a whole. Apple Inc., Microsoft Corp., and Alphabet Inc. hit records this week, as did the S&P 500 Index. Facebook Inc. is about 5% below its record close.
The e-commerce company’s disappointing outlook last month came with revenue that missed estimates for the first quarter since 2018. Analysts have pared back their expectations in the wake of the report. For Amazon’s current quarter, the average earnings estimate has dropped about 16.5% over the past month. The revenue consensus has fallen by nearly $6.5 billion, or 5.5%, over the same period.
The average analyst price target implies gains of about 30%, by far the highest expected upside among mega-caps.
The stock’s current level “represents an opportunity for sure,” said Dan Forman, managing director and global technology sector specialist at MKM Partners. He added that the stock had priced in the growth concerns and that year-over-year comparisons would get easier after the fourth quarter.
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