Recent times have not been kind for Amazon (AMZN). The stock has come under pressure as, unsurprisingly, the company has been unable to sustain the outstanding growth seen at the height of the pandemic’s impact.

The stock market has been somewhat unforgiving, and exacerbated by the overall recent downturn, shares now sit 20% below last July’s all-time high.

Which lays the ground for an intriguing quarterly readout, when the company delivers Q4’s financials this Thursday (Feb 3, AMC).

According to Evercore’s Mark Mahaney, the Street’s expectations for revenue of $137.8 billion, operating income of $2.480 billion and EPS of $3.72 “look reasonable,” despite having a more bullish tint than Mahaney’s forecast. The analyst expects a more subdued performance given a proprietary Evercore survey showed “slightly muted” Q4 trends for ecommerce participants.

However, in 17 of the last 23 quarters Amazon has delivered above the high-end of its Operating Income guide, and Mahaney admits his Q4 Operating Income estimate of $1.108 billion “may prove to be conservative.”

That said, moving forward, the 5-star analyst thinks the Street might be overconfident. Looking at expectations for 1Q22, consensus is calling for a sequential revenue drop of just 12%, which Mahaney says is “a tad aggressive.” Even more optimistic is the Street’s 1Q22 Operating Income estimate, which stands at $6.6 billion and indicates a 5.5% margin. Mahaney calls this forecast “very aggressive,” expecting OI of $4.1 billion and a 3.5% margin.

The consensus view probably underestimates several factors’ impact, according to Mahaney. “We believe the Street may not be fully accounting for margin headwinds created by ongoing wage inflation, ongoing tho lessening supply chain issues, dramatic logistics investments, media spend, and AMZN’s COVID-related spend,” he explained.

Nevertheless, Mahaney stays with the bulls. The analyst rates AMZN an Outperform (i.e. Buy) along with a $4,300 price target. This would reflect gains of ~44% should the stock ultimately reach this target. (To watch Mahaney’s track record, click here)

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Overall, Amazon is a rare beast: a name with large analyst coverage lacking any naysayers. Based on Buys only – 22, in total – the stock boasts a Strong Buy consensus rating. The Street’s average price target stands at $4,192 and change, and suggests ~40% upside potential for the next 12 months. (See Amazon stock forecast on TipRanks)

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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.

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