Goldman Sachs analyst Eric Sheridan has named Amazon as its top e-commerce pick, anticipating strong trends in the sector for the first quarter. This bullish sentiment is reflected in Sheridan’s decision to maintain a buy rating and a $220 price target on Amazon, despite the company expected to post its earnings results on April 30. With a target suggesting a 26% potential upside for the stock, it is evident that Goldman Sachs sees significant growth potential in Amazon. The analyst’s confidence in Amazon is further supported by industry research and third-party data sources indicating resilient consumer spending in the first quarter. However, there is cautiousness regarding the sector’s outlook for 2024 due to the wide dispersion of expected results from tech companies. Factors contributing to Sheridan’s positive Amazon rating include strong consumer demand levels in the retail business, the expectation of AWS revenue reacceleration, and solid advertising revenue growth driven by momentum and secular tailwinds. Additionally, Amazon’s North America margins are expected to benefit from an increasingly efficient logistics network and operating leverage, indicating residual upside for the company.
On the other hand, Morgan Stanley has taken a more conservative approach towards Apple, cutting its price target from $220 to $210. This decision was made despite Analyst Erik Woodring reiterating an overweight rating on the tech giant. The reduced price target implies a 27.3% upside over the next 12 months, reflecting Morgan Stanley’s belief that Apple’s fiscal second quarter report will be good but not stellar. Woodring expects Apple to slightly beat March Q Consensus revs/EPS, driven by stable product demand and Services outperformance. However, the analyst anticipates June Q rev guidance closer to MSe of $80B versus Consensus at $83.5B, aligning more with buyside expectations at $78.5-81.5B. This cautious stance is based on the belief that there will be a similar earnings setup to three months ago, with slight revenue upside in the March quarter but a significant guide-down in the June quarter compared to Consensus. Despite this outlook, Apple’s shares have experienced a 14% decline in recent times, lagging behind other major tech names.
The contrasting analyst calls on Amazon and Apple highlight the diverse perspectives and strategies that Wall Street firms adopt when evaluating tech companies. While Goldman Sachs remains bullish on Amazon, citing strong sector trends and potential growth drivers, Morgan Stanley takes a more reserved approach towards Apple, acknowledging positive performance but tempering expectations for future guidance. These differing viewpoints underscore the complexity of financial analysis and the importance of considering multiple factors when making investment decisions. As investors navigate the ever-changing landscape of the stock market, they must carefully weigh the insights provided by analysts and conduct thorough research to formulate well-informed strategies for their portfolios.