Zacks analyst blog spotlights Amazon, Target, Walmart, Etsy and Shopify

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For immediate release

Chicago, IL – April 12, 2022 – Zacks.com announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Stocks recently featured in the blog include Amazon.com, Inc. AMZN, Target TGT, Walmart WMT, Etsy Inc ETSY and Shopify SHOP.

Here are the highlights from Monday’s analyst blog:

What Amazon’s Retail Estimates Tell Us

First e-merchant in the world, Amazon.co.uk, Inc. needs no introduction. He single-handedly started a retail revolution in the United States that quickly spread to the rest of the world. Amazon’s success has actually forced traditional retailers like Target and walmart go online because they were losing business.

Some of the traditional retailers have also teamed up with Amazon and still others have had to close their doors. Amazon’s success has also encouraged new online-only retail operations, such as Etsy Inc. and Shopify begin.

Amazon generates approximately 60% of its total revenue in the North America region and its diversification into Europe, Asia and other regions currently brings in an additional 27%. The balance comes from its infrastructure-as-a-service business, AWS. We are only looking at the first two segments here as we take a closer look at its retail business.

Over the past four years, retail in North America has performed largely in line with analyst estimates. The exception was the 2020 pandemic, when Amazon missed analyst estimates by around 27%. Excluding 2020, this activity recorded a positive surprise of 0.37%.

International revenues were relatively disappointing. Again excluding 2020 where Amazon missed by more than 25%, the average surprise was -0.3%.

Analysts probably got overly optimistic in 2021, when things were really fluid with gradual vaccination and new waves of infection causing reopening spending to rise and fall. Thus, North American activity recorded negative surprises during the June and September quarters, followed by a positive surprise of 1.58% during the holiday quarter.

International activity proved more difficult to predict. After beating estimates by 8.07% in the March quarter, it missed estimates for the next three quarters by 2.36%, 2.42% and 7.09% respectively.

This likely led analysts to initially lower estimates for the current year and also for 2023. But estimates have started to rise again over the past 30 days, indicating improving sentiment. Thus, the net change in estimates over the last 90 days was $2.76 (+5.6%) for 2022 and $2.01 (+2.7%) for 2023.

Conclusion

While Amazon is a strong player in the infrastructure segment, the bulk of its revenue still comes from retail, making this segment very important to study. The surprising retail story shows that analysts are still unable to assess the exact impact of the pandemic, especially in international trade.

So while the estimates are rising again, they may still be risky, indicating that it’s probably a good idea to hold current positions at this time. This explains the #3 (Hold) rating on Amazon stocks.

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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.

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