Amazon.com, Inc. AMZN reported its Q3 results mostly in line with the estimates but mixed in terms of the consensus expectations.
Cantor Fitzgerald’s Youssef Squali maintains a Buy rating on the company, with a price target of $1,000.
Positive Expectations
“In typical Amazon fashion, increased investments in infrastructure, video content and India weighted on profitability,” Squali mentioned.
On the other hand, the stable year-on-year revenue growth is evidence of Amazon’s “powerful flywheel,” Prime, while FBA drove increased velocity of orders supported by an optimized delivery platform.
The analyst believes top-line growth and year-over-year margin improvement could be key drivers of the stock over time.
However, profitability metrics are expected to continue to be volatile quarter-to-quarter, with downside risk in the near term and management investing aggressively in specific initiatives.
Mixed Results
Amazon reported its Q3 revenue in line with expectations at $32,714 million, representing 29 percent year on year growth.
GAAP EPS missed the consensus forecast at $0.52, while adjusted EBITDA was in-line with the consensus at $3,428 million.
AWS continued to be strong, with revenue growth of 55 percent year-on-year. Operating margin also continued to improve, reaching 31.6 percent during the quarter.
The company reported solid growth across geographies, with North America sales rising 26 percent year-on-year and international sales growing 28 percent.
At last check in Friday's pre-market, Amazon was down 5.42 percent at $774.
Image Credit: By SounderBruce from Seattle, United States (Amazon Books at U Village) [CC BY-SA 2.0], via Wikimedia Commons.
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