Analyst Amazed With Amazon's Top And Bottom Beat And Raise In Q3

The firm reiterated its Outperform rating and raised its price target on the shares from $1,400 to $1,430.

In pre-market trading, shares of Amazon were rallying 9.11 percent to $1,060.98.

Analyst Ken Sena noted that the company reported third-quarter results that clearly exceeded his expectations and the expectations of most. The analyst said the standout was, however, the company's fourth-quarter guidance, which at the mid-point was above the top- and bottom-line estimates of Street.

The analyst sees this as bolstering his broader industry thesis that underlying advances with data collection, computing efficiency and a broader industry transition toward a more adaptive-style of computing would hasten efficient expansion into new areas (see Sena's track record here).

"Moreover, as Prime, Fresh, and other new store formats (e.g., Go, Bookstores, etc.) become more integrated into the company's Wholesale Foods business, we see an even stronger chance for such expansion in Amazon's case," the analyst added.

As a supporting evidence, Wells Fargo noted that just ahead of the earnings call, news emerged that the company has received wholesale pharmacy licenses in 12 states.

On key metrics, the firm noted that total revenues rose 34 percent year-over-year to $43.7 billion, ahead of the Street estimate of $41.7 billion. Core revenue growth accelerated to 30 percent, the firm added. Excluding Whole Foods' contribution of $1.3 billion, the firm said revenues were $42.5 billion, 2 percent ahead of its forecast.

The firm attributed the outperformance to strength across revenue segments, as Online Stores revenue, Subscription Services revenue and Other Revenue all accelerated on a forex neutral basis, relative to the second quarter.

Consequently, the firm noted that operating income came in at $347 million, ahead of its estimates, and margins were 80 basis points ahead of its estimates.

As such, the firm raised its fourth quarter and 2018 revenue estimates by 8 percent, each, to $60.6 billion and $232.2 billion, respectively, fully factoring in Whole Foods.

The firm said it expects Amazon to remain aggressive and experimental when it comes to pricing and new in-store/delivery strategies pertaining to Whole Foods. Therefore, the firm maintains its operating income estimates for the fourth quarter and 2018 at $1.50 billion and $6.94 billion, respectively.

At time of publication, shares of Amazon were up 8.45 percent at $1,054.58.