Amazon EPS Remains 'Unpredictable,' Wedbush

In a report published Monday, analysts at Wedbush maintain their Neutral rating on Amazon.com, Inc. AMZN, while raising the price target from $330 to $385. The company is scheduled to report its Q1 results on April 23. The analysts expect the company to report robust revenue growth for Q1, driven by the increasing AWS account and the new Prime members. "We expect some upside to consensus revenue estimates from growth in Prime revenues driven by additional media options, same-day fulfilment options and higher average Prime pricing. We think AWS growth likely continued unabated during the quarter," the analysts said. Amazon's EPS, however, continues to be unpredictable, with spending on new initiatives consistently affecting the operating income. Given the number of new Amazon Studios that were announced during the quarter, the analysts expect spending to continue to increase. "Additionally, fulfillment expense may grow more than we estimate (up 20bps y-o-y) as Amazon spends on delivery drone testing and same-day delivery," the analysts added. The FY15 EPS estimates have been revised from $1.00 to $0.50 to account for increased content and technology spending. While there was limited visibility into the Amazon Web Services business in the past, the company now intends to report AWS results separately with the North America and International results, starting Q1:15.
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