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  • Writer's pictureGVA Research

Amazon’s International Outlook ‘Somewhat Mixed,’ Garrity Says

David Garrity talks about Inc. results and outlook. The company reported quarterly profit that exceeded analysts’ estimates. Still, the e-commerce giant’s forecasts for the current quarter fell short of projections Garrity speaks on “Bloomberg Daybreak: Australia.”

AMZN Results Show Record Earnings Generation Despite Slowing Sales Growth

The 1Q19 results for AMZN were essentially in line with expectations (Revs $59.7bn (Street $59.7bn), EPS $7.09 (Street $4.67)) with AWS cloud computing operations ($7.7bn, 13% of total revenues) growing +41% year/year to maintain #1 position in the market ahead of MSFT’s Azure operation which experienced +73% year/year growth during the March 2019 quarter.

The revenue growth of +17% year/year did mark a continuation of the slowing top-line growth pace AMZN has been experiencing and revenues did come in at the midpoint of the company’s guidance range of $56bn – $60bn. However, with 1Q19 results AMZN realized greater profit levels than what was seen in the seasonal strength peak of 4Q18. Over the past 4 quarters, AMZN has generated $12bn in earnings, marking a decisive turn for the historically loss-making company.

Meanwhile, the online advertising duopoly of FB and GOOGL are coming under increasing scrutiny on a number of fronts, we believe this offers AMZN an excellent opportunity to present itself to advertisers as an attractive alternative to what we view as an increasingly compromised FB platform. As such, look for the duopoly to become a three player game in which FB is strategically challenged and AMZN the beneficiary.

Investors should find AMZN shares attractive at current levels.

Tech Sector Leadership Reaffirmed By 1Q19 Results

Earlier in the day, diversified global industrial company MMM alarmed investors with results and guidance indicating weakness across the range of operations in markets such as China, electronics and automotive which drove a year/year revenue decline and -13% share price drop on the 1Q19 results release. AMZN may offer some solace to investors that there are pockets of profitable growth available. However, we expect markets to trade sideways as signs of weakness prompt greater investor caution.

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