Wall Street Weighs In On Amazon's Earnings Miss

Amazon.com, Inc. AMZN shares tumbled more than 2 percent on Friday after the company’s second-quarter earnings report fell short of the markets expectations.

A number of Wall Street analysts weighed in on Amazon following the report. Here’s a rundown of what they had to say.

Voices From The Street

UBS analyst Eric Sheridan said Amazon’s report was a double-edged sword, with higher-than-expected revenues across the board coupled with disappointing operating income and guidance. “Going forward, while the stock may take a pause to digest lower profit ests, we think Amazon's strategic positioning in two long runway markets (eCommerce & cloud) present a stock that is a core holding for growth/Internet investors,” Sheridan wrote.

BMO Capital Markets analyst Daniel Salmon said Amazon should begin to lean more heavily on advertising this holiday season. “We expect both the North American retail business – driven by Prime — and Amazon Web Services (AWS) to support margin expansion, even as Amazon invests aggressively internationally,” Salmon wrote.

Jefferies analyst Brian Fitzgerald said Amazon’s aggressive spending will continue to deliver impressive growth numbers and “reinforce its competitive moats. 

RBC Capital Markets analyst Mark Mahaney said the markets in which Amazon is focusing are large and ripe for the picking. “Amazon's two key end-markets—retail and cloud computing—are still only 10-15% penetrated," Mahaney wrote.

Goldman Sachs analyst Heath Terry said investors are still not fully appreciating the potential in e-commerce and cloud computing. “We continue to believe that we are in the early stages of the shift of compute to the cloud and the transition of traditional retail online and that the market is under-estimating the long-term financial impact of both to Amazon,” Terry wrote.

Cantor Fitzgerald analyst Kip Paulson said nothing about Amazon’s quarter should deter long-term investors. He called Amazon’s Q2 “another impressive quarter, with net sales growth accelerating to 26 percent and with solid guidance that assumes a continuation of 20–28 percent growth in the third quarter, partially offset by aggressive investments in fulfillment capacity, headcount, video content, AWS, and other areas,” Paulson wrote.

Related Link: Facebook's Post-Earnings Run Mirrors Positive Voices From The Street

Ratings And Price Targets

Wall Street is mostly bullish on Facebook’s stock following the mixed quarter, but some firms are more bullish than others:

• BMO Capital Markets has an Outperform rating and $1,200 price target.
• UBS has a Buy rating and $1,200 price target.
• Jefferies has a Buy rating and $1,250 price target.
• RBC Capital has an Outperform rating.
• Cantor Fitzgerald has an Overweight rating and $1,150 price target.

At last check, shares of Amazon were down 2.15 percent at $1,023.46.