Amazon stock and other e-commerce players eBay and Etsy have momentum heading into second-quarter earnings season as fears about tariffs ease. But investors will be focused on how each company guides for the current quarter, an analyst said Thursday.
In a note previewing Q2 earnings season, Bernstein analysts led by Nikhil Devnani raised their price targets for shares of eBay and Etsy, while reiterating a 235 price target and "top pick" designation for Amazon stock.
Investor confidence has bounced back as President Donald Trump has lowered his Liberation Day tariffs — as indicated by a recovery in price-to-earnings multiples for e-commerce players, the Bernstein report said.
"Multiples are back up to January levels, and in various instances (Etsy, eBay and Wayfair) above it again," Devnani wrote. "Yet tariffs remain a top-down risk that could start to emerge in pricing/gross margin pressures as Q3 plays out and consumers work through pre-tariff inventory. To that end, guidance needs to confirm the 'stable to improving' bull case."
Amazon Stock: 'Best Pick'
For Amazon, Devnani said the easing concerns about tariffs have shifted investor focus back to the company's Amazon Web Services cloud business. Bernstein's team of analysts expect AI to help boost revenue growth for the cloud division, which drives the majority of Amazon's profit.
The retail business appears stable, the note added.
"We expect operating income upside against conservative guidance, though could see some modest risk with sponsored product ads over-indexed to China-based sellers," Devnani wrote. Bernstein holds an outperform call on Amazon.
Amazon stock has underperformed the S&P 500 with just a 2% year-to-date gain. However, it has bounced back from the tariff hit it took in April with a roughly 20% gain since Trump announced a deal with China in May.
Amazon hasn't confirmed its Q2 earnings date. The results are projected to publish July 31, according to FactSet.
EBay Stock Up Nearly 25% In 2025
EBay stock, meanwhile, took a more modest hit from tariff concerns in April and bounced back quickly. Shares are ahead 24% this year.
Devnani upped his price target for eBay stock to 75 from 65 but stuck to a market-perform call. He said, however, that there is upside to his current estimate for eBay to post roughly 2% gross merchandise volume (GMV) growth. On average, analysts expect eBay's GMV to grow 2.7% to $18.9 billion for the June quarter, according to FactSet.
"The stock does have to contend with a higher bar, which we suspect has nudged up from 2%-3% GMV (gross merchandise volume) growth to 3%+ looking forward, and keeps us on the sidelines," Devnani wrote.
EBay will report earnings on July 30.
Meanwhile, Bernstein upped its price target for Etsy stock to 50 from 45 while sticking to a market-perform rating. Etsy has fallen hard from its day as a hit stock during the pandemic. That has corresponded with a sales slowdown for the handmade-products-focused online marketplace.
But Bernstein noted that "underlying engagement appears to have improved" for Etsy in recent months. Etsy has rallied more than 40% from a low-point in early April. Simply "moderating" Etsy's decline in gross merchandise volume could help the stock as current expectations are low, Devnani wrote.
Etsy is also scheduled to report earnings on July 30.
E-Commerce Group Performing Well
Amazon stock added a fraction to close at 223.99 on the stock market Thursday. Etsy added 3% to close at 57.97 while eBay closed a fraction lower, at 76.80.
Despite uncertainty around global trade from tariffs, e-commerce stocks have outperformed this year. The 59-stock Retail-Internet industry group tracked by IBD ranks 9th among 197 industry groups, based on six-month price performance. The overall group is up 16% year to date.
The top-ranked stock in the group, based on IBD Composite Rating, is DoorDash. DoorDash stock has a best-possible 99 IBD Composite Rating. The score combines five separate proprietary ratings into one.
Amazon has a Composite score of 94, while eBay is 92 and Etsy a much weaker 60 out of 99.
The e-commerce stock group also got a boost from strong gains by international-focused companies. Shopee parent company Sea Ltd. has gained 59%, while Latin America focused e-commerce company MercadoLibre is up 39%. China e-commerce giant Alibaba Group has rallied 38% year to date.
