Analysts are optimistic about Amazon's earnings report performance; Prime Day may become a catalyst for stock price

Despite Amazon's (AMZN.US) stock price being almost stagnant this year, analysts believe that with the second-quarter earnings report approaching, this e-commerce giant is likely to see an opportunity for stock price appreciation.

According to the Zhitong Finance APP, Truist Securities analyst Youssef Squali released a report on Wednesday, raising Amazon's target stock price from $226 to $250, indicating about a 13% upside from Tuesday's closing price of $220.46. He also maintained a "Buy" rating, citing that Amazon's second-quarter performance may exceed market expectations.

Squali pointed out in the report that Amazon's second-quarter performance will benefit from "North American consumers who are almost unaffected by macroeconomic factors or tariffs," which will drive the company's revenue and profits beyond market expectations.

Previously, the market was generally concerned that rising tariffs might lead companies to increase product prices, thereby suppressing consumer spending. However, Amazon CEO Andy Jassy stated in an interview this week, "We have not seen a significant increase in product prices so far."

Jassy added, "We did a lot of advance purchasing months ago, and our third-party sellers also deployed their inventory in advance to cope with the uncertain tariff outlook." This has allowed Amazon to maintain price stability and ample supply amid tariff uncertainties.

So far this year, Amazon's stock price has only risen 0.4%, significantly lagging behind the S&P 500 index's 5.7% increase. However, Squali believes that if Amazon's earnings report at the end of this month provides an optimistic outlook, it could open up upward space for the stock price.

According to FactSet data, Amazon is expected to announce its second-quarter earnings report around July 31. Before that, the company will hold its annual summer Prime Day promotional event from July 8 to 11. This year's event will be twice as long as the promotion in July 2024, potentially bringing a sales peak for the company.

Prime Day is an important promotional event where Amazon offers exclusive discounts to its Prime members, covering a variety of products from both first-party and third-party sellers on the platform. The market is highly focused on whether Amazon's management will disclose preliminary sales performance from this promotional event during the earnings call.

Bank of America Securities analyst Justin Post predicted in a report released on Tuesday that the gross merchandise volume (GMV) for this summer's Prime Day could reach $21.4 billion, a year-on-year increase of about 60%. GMV includes the total amount of all products sold on the Amazon platform by both self-operated and third-party sellers.

Post also gave Amazon a "Buy" rating, with a target price of $248, which is close to Truist's forecast.

On Wednesday, Amazon's stock price slightly fell by 0.2%, closing at $219.98. However, analysts generally believe that if the second-quarter earnings report performs well, especially if the consumption data driven by Prime Day exceeds market expectations, it could become an opportunity for Amazon's stock price to break through