Amazon Earnings Expectations Muted, SunTrust Says

Amazon.com, Inc. AMZN had a rocky 2014 – at least with investors – as its share price fell 22 percent, while the NASDAQ gained 14 percent. A note on Monday from SunTrust reiterates the firm’s Buy rating and $360 price target.

SunTrust is looking at Q4 revenues of $29.96 billion, with $8.45 billion in net profit. However, SunTrust is pointing shareholders to Q1 guidance as a more determinant factor in the stock moves. The firm said revenues in Q1 will be at $22.95 billion, with $6.99 billion in net profit.

SunTrust analyst Bob Peck is generally constructive on the retailer, noting that Amazon Prime might continue to impress. The company already disclosed 10 million new Prime trials in Q4, which could help drive guidance as the trials are converted to memberships.

However, there is reason that investors should be cautious, SunTrust noted. Foreign sales – which account for 38 percent of Amazon’s revenue – should be down on a stronger U.S. dollar, also pressuring guidance and sales into Q1. Secondly, while many view the Prime trials as a positive, SunTrust warned that it may have materially impacted shipping costs, with no revenues to offset that.

Shares of Amazon closed Friday at $312.39.