The explosive growth of online retail and ecommerce had to either eventually slow down, or simply not meet consensus expectations. In the case of Inc. (AMZN), both of these turned out to be true. However, that does not mean the bull case for Amazon is over. The stock faced a difficult wall of high expectations for its Q2, and has many strong upsides up its sleeve for the second half of FY21. (See stock charts on TipRanks)

Reporting on the instance is Mark Mahaney of Evercore ISI, who opined that a long-term investment hypothesis is still “intact,” despite the “miss and lower quarter.”

Mahaney reiterated a Buy rating on the stock, and declared a new price target of $4,200. This target reflects a possible 12-month upside of about 25.64%, although it was lowered from his previous one of $4,500.

The five-star analyst elaborated that revenue growth was 27% year-over-year, and Amazon Web Services (AWS) saw 37% growth in that same time period, beating expectations. He added that the GAAP operating margins were the highest ever seen in any Q2 for AMZN.

Partly underpinning the deceleration in ecommerce spending was an increase in social mobility from vaccination initiatives. The difficult comparisons to Q1 were also culprits in the lackluster earnings print.

Looking toward Q3 and 2H for FY21, Mahaney sees investment theses supported by Amazon’s “capacity expansion, logistics infrastructure, development of Alexa and 3P partners, Amazon Video, Amazon Pharmacy, and Grocery expansion.”

On TipRanks, AMZN has an analyst rating consensus of Strong Buy, based on 31 Buy ratings. The average price target is $4,217.71, which represents a potential 12-month upside of about 26.83%. As of this writing at 10 a.m. EST Tuesday, AMZN is trading at about $3,326.40.

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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