Amazon (NASDAQ: AMZN) stock price has been under pressure since the beginning of the second half this year. AMZN shares slid below $1800 level after reporting lower than expected results for the third quarter. The company missed earnings estimates for the second quarter in a row.
In addition, its revenue growth has been softening quarter over quarter. Traders believe increasing market competition is negatively impacting Amazon’s growth potential. Fortunately, market analysts are seeing the dip in Amazon stock price as an attractive entry point for long-term investors.
The Dip in Amazon Stock Price is a Buying Opportunity
The majority of market analysts are showing bullish sentiments for Amazon. RBC’s Mark Mahaney has set a price target of $2500 with an Outperform rating. Morgan Stanley believes the efficiency in one-day delivery is a good sign despite lower than anticipated guidance for the final quarter.
Morgan Stanley says, “About 25% of U.S. units went through one-day shipping in the quarter. The cost and complexity to compete with Amazon are rising.” The firm has set the price target of $2,100.
JPMorgan, on the other hand, suggests investors buy on the dip. The Bank says, “We’ll take the trade-off of lighter profits for higher revenue – Amazon’s earned it.”
Jefferies and Goldman are of the opinion that short-term headwinds are presenting an attractive entry point for new investors.
Light Guidance Could Keep AMZN Shares Under Pressure
Although its Q3 net sales grew 24% from the previous year period, the company missed consensus profit estimates. Its Q3 operating income declined to $3.2B compared to $3.7B in the year-ago period. The net income stood around $2.1B, down from $2.9B in Q3 of 2018.
The company has reduced its guidance for the final quarter this year. It now expects full-year sales to grow in the range of 11-20% Y/Y. The company’s operating income is likely to stand around $1.2B-$2.9B, down significantly from past year income of $3.8B. Overall, Amazon stock price is likely to remain under pressure in the short-term.
