Amazon: BMO Lowers Estimates Due To Expected Headwinds

On October 28th, Inc (NASDAQ: AMZN) reported its 2021 third quarter financial results. The company reported revenues of $110.81 billion, slightly down from last quarter but up from the $96.15 billion last year. Revenue slightly beat the consensus estimate. Gross margins came in at 43.2%, flat quarter over quarter but the highest it’s been in 10 quarters. The operating margin for the quarter was 4.4%, the lowest its been since December of 2019. Net margin was 2.8%/$3.16 billion while earnings per share were $6.13.

A number of analysts changed their 12-month price target, bringing the consensus to $4,102.31, slightly down from the $4,145.46 estimate ahead of the results. Out of the 57 analysts covering the stock, 20 have strong buy ratings, 36 have buy ratings and a single analyst has a hold rating. The street high sits at $5,000 while the lowest comes in at $3,775.

In BMO Capital Market’s third quarter review, they reiterate their outperform rating and $4,100 12-month price target, saying that the fourth-quarter results were “disappointing,” and that the company continues to face tough comps and limited progress getting back to pre-pandemic levels. They write, “we think the potential for improved monetization through accelerating video advertising and Prime member growth, and potentially Prime price increases make upside scenarios increasingly attractive.”

On the revenue segments, NA Revenue came in at $65.6 billion, below BMO’s $66.6 billion estimate, while International Revenue, coming in at $29.1 billion, beat BMO’s $28.5 billion estimate. AWS Revenue and Online Store revenue beat BMO’s estimates with revenue coming in at $16.1 billion and $49.9 billion respectively.

BMO slashed their third quarter earnings per share estimate while lowering their third quarter, 2021, and 2022 estimates whole. They say this updated forecast reflects Amazon’s third quarter results and fourth quarter estimates. They are also modeling a drop in revenue due to the lapping of Prime Day in October 2020 and COVID-19/labor/supply chain issues.

Below you can see BMO’s updated estimates.

Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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