Are Amazon and Apple still a Buy after disappointing earnings? Analysts at Canaccord Genuity (TSX:CF, LSE:CF) think so.
The two heavyweights reported less-than-stellar results on Thursday, with Amazon in particular coming in far below expectations.
The ecommerce giant lowered its fourth-quarter revenue guidance to between $140 billion and $148 billion, well below current analyst forecasts of around $155.15 billion.
READ: Apple fiscal 4Q earnings beat estimates but iPhone revenue comes up short
Apple, on the other hand, fared better when it came to revenue and earnings per share, but iPhone revenue came up short at $42.63 billion, up 9.67% year-over-year, but less than Street expectations of over $43.2 billion.
Both Apple and Amazon fell in afterhours trading on Thursday following the results. Apple stock regained ground on Friday but Amazon wasn’t so lucky, losing another 10% by midday trading.
That said, analysts at Canaccord still had positive sentiments towards both companies.
Apple’s fiscal 4Q results were strong despite sustained f/x headwinds, analysts noted Friday.
“Despite ongoing global F/X headwinds, the company continues to demonstrate the strength of its product ecosystem with broad-based growth across its lineup,” analysts wrote.
Analysts noted Apple’s strong iPhone sales across all regions with 10% YoY revenue growth.
“We anticipate ongoing growth trends as 5G smartphones grow, leading to its installed base to expand and drive higher-margin services revenue. With the 5G upgrade cycle likely a benefit for the next several years, other hardware categories growing nicely with strong mix of new subscribers, and continued mix shift toward high-margin services, we introduce our F2024 estimates, reiterate our Buy rating and $200 price target.”
READ: Amazon.com lowers fourth quarter guidance sending shares down 16%
And then there’s Amazon.
Even though there were some bright spots in its 3Q results – total revenue grew around 15% year-over-year, just below consensus, and its operating margin of 2% was slightly above the midpoint of guidance – investors reacted with a huge selloff on Thursday after the bell.
Amazon expects moderating sales growth to persist throughout 4Q, with international more impacted than North America given a more difficult recessionary environment and geopolitical uncertainty.
As a result, Canaccord lowered its price target to $160 from $200 but feels that the stock represents a good buying opportunity.
“Shares of Amazon fell noticeably on the lower guidance and are now down nearly 50% from their all-time high, and while near-term results are likely to remain pressured by a challenging operating environment, we feel the current valuation represents an attractive entry point for long-term investors,” the analysts wrote.
Shares of Amazon were hovering around $100 on Friday in New York.
Contact Angela at angela@proactiveinvestors.com
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