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The Amazon stock price soared 12% to $669.92 today (Friday) after trouncing earnings estimates and posting its fourth straight quarterly profit. Plus, the company announced that sales soared 28% in the quarter.
This is a huge move for the Amazon stock price, but we think it's just the start. In fact, we see Amazon stock as one of the best long-term investments on the market.
But before we get to our outlook on the Amazon stock price in 2016, here's what every investor needs to know from the earnings report...
After Thursday's close, Amazon.com Inc. (Nasdaq: AMZN) reported Q1 2016 net income of $1.07 per share on $29.1 billion in revenue. That was up significantly from a loss of $0.12 per share on revenue of $22.7 billion in the same quarter last year. Those figures topped expectations for EPS of $0.58 on $27.9 billion in revenue.
Operating income surged to $1.1 billion. That was much higher than the $255 million in the prior-year period. Analysts were looking for about $566.1 million.
Even in the face of growing competition, Amazon Web Services saw its sales spike 64% to $2.57 billion. That also beat expectations of $2.54 billion.
Sales comfortably beat estimates in its North America and international units. Sales in North America rose 27% to $16.99 billion from $13.41 billion year over year (YOY). That was better than estimates of $16.5 billion.
International revenue increased 24% to $9.57 billion from $7.75 billion, also beating expectations of $8.96 billion.
Strong forward guidance is another reason the Amazon stock price today is soaring...
For Q2, Amazon projects net sales of $28 billion to $30.5 billion. That would mark substantial growth of 21% to 32% YOY. Wall Street expects $28.32 billion in revenue.
Amazon forecasts operating income will fall between $375 million and $975 million. Wall Street has an estimate of $860.5 million.
The Amazon earnings numbers were undoubtedly bullish, and today's AMZN stock price surge is warranted. And the best news for investors is that there is no end in sight for the Amazon stock price rally. Here's why...
Why We're So Bullish on the Amazon Stock Price in 2016
Money Morning Director of Technology & Venture Capital Michael A. Robinson credits Amazon CEO Jeff Bezos and his vision for turning the company into the tech, entertainment, and retail giant it is today.
Bezos' vision will continue to drive the Amazon stock price higher. Amazon is gaining a foothold in the Internet of Things (Iot) space, spending more on video content, speeding up its delivery process, and expanding into new territories.
A number of analysts upped their Amazon stock price targets following the impressive quarter.
- Mizuho reiterated its "Buy" recommendation and raised its Amazon stock price target to $810 from $685. The firm cited strength in its Prime users, noting international Prime users are driving accelerating sales.
- RBC raised its Amazon price target to $800 from $715, adding Q1 was an inflection point quarter.
- Axiom raised its target to $811 from $797. The firm said Amazon could very well create a full logistics business in the future.
- The Benchmark Company raised its Amazon stock price target to $750 from $735. The firm said in what has historically been the least meaningful quarter, Amazon recorded a top- and bottom-line surprise. They believe results reinforce their thesis that Amazon still has significant opportunities for growth, particularly outside North America.
- Stifel raised its Amazon price target to $888 from $775. The firm said Amazon reported an extraordinary quarter with revenue and margins exceeding their consensus estimates, as well as surpassing the high end of guidance.
- Wedbush raised its Amazon price target to $775 from $700. The firm said after years of uneven profits, Amazon finally appears poised to deliver substantial earnings growth. Amazon surprised the market with outsized EPS growth, which the firm expects to continue.
At a recent $658.05, the Amazon stock price is up 53.51% over the last year.
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