Amazon Will Deliver This Quarter, Says Deutsche Bank

Amazon.com, Inc. AMZN is likely to deliver strong revenue and significant upside to operating profit over the next couple of quarters, Deutsche Bank’s Ross Sandler said in a report. He maintains a Buy rating on the company with a price target of $985.

Checks indicate that AWS continues to be “the key catalyst for upside to the story,” analyst Sandler noted. Moreover, the retail business keeps expanding every quarter by “taking over more of the value chain in logistics.”

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Q3 Preview

Sandler mentioned that checks indicated traction from AWS, specifically in the following:

• New customer wins across a number of verticals, with certain enterprise workloads growing more than 100 percent on AWS and faster adoption “up the stack.”
• A “tipping point” for FIG customers shifting to public cloud in 2016–2017.
• Conversations shifting from pricing to speed and agility, which is the reason AWS continues to take dollar share from Azure and GCP.

There is some upside to the DB revenue estimate of $3.2 billion for AWS in Q3. “3Q retail CSOI should reflect front-loading 2H costs, which we think sets AMZN up for its first potential consolidated CSOI print of $3+ billion in 4Q,” the analyst wrote. He added that the company seemed to be “firing on all cylinders,” and there were “few holes to poke” in the Amazon story as of now.

At last check, Amazon was down 0.92 percent at $834.00.

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