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What The Street Thinks Of Amazon Ahead Of Earnings

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What The Street Thinks Of Amazon Ahead Of Earnings
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Amazon.com, Inc. (NASDAQ: AMZN) will report Q1 2015 earnings results after the markets close Thursday. Several Wall Street firms gave their opinion ahead of the announcement.

Wedbush: Neutral, $395 price target

Michael Pachter and Nick Mckay wrote:

"Amazon is a dominant online retailer well on its way to becoming one of the world's largest retailers,in our view. We believe the company enjoys considerable advantages over its brick-and-mortar competitors, due to its low direct overhead. Amazon management is quite ambitious, expanding into expensive digital media through its Kindle, Fire TV, Fire phone, Fire TV stick and Echo hardware and its Prime Instant video streaming and Amazon Studios, depressing the company's earnings power."

"Similarly, the expansion of Amazon Web Services has thus far been quite costly, although we think that AWS is at a tipping point and will generate significant leverage going forward. In order to take a position in Amazon, we believe investors must make a leap of faith that its revenues will continue to grow and will generate high contribution margin; we have made the leap of faith on revenues, but the lack of visibility on contribution margin gives us pause, and we prefer to stay on the sidelines."

Related Link: Amazon Is In A 'Temporary Phase' Of Wanting To Show Cash Flow

Deutsche Bank: Buy, $410 price target

Ross Sandler and Deepak Mathivanan wrote:

"We came away from the AWS Summit feeling bullish on the pace of growth, innovation and developer adoption at the business. The new production introductions were well received and reinforce the business's positioning in the market. We believe AWS could be on a ~$6 billion run-rate and currently unprofitable on a CSOI basis."

"Stepping back from 1Q, the company is signaling that 2015 could be one of those classic AMZN temporary pull back the heavy investment‛ modes, which should allow estimates to revise higher and shares to work their way towards (or above) our $415 price target."

Bank of America: Buy, $400 price target

Justin Post and Paul Bieber wrote:

"We think Amazon's focus on the customers and the buyer experience is right for the Internet, and we consider Amazon a transformational company. We think Amazon is well positioned to capitalize on the global growth of eCommerce and other secular trends such as cloud computing, online advertising, connected devices,and mobile commerce."

"While we share Street optimism on the benefit of strong prime adoption,lower gas prices, and easier AWS comps, improving consumer trends in Europe, and Japan tax anniversary to drive 2H'15 acceleration, recent stock appreciation has made the set up into 1Q results more difficult. We believe a sluggish 1Q for US eCommerce, FX pressure and ongoing investment spending (AWS, distribution, and content) will limit upside to 1Q results. We think a bigger beat could come in 2Q (assuming AMZN's guides 2Q in usual range)."

BGC Partners: Hold, $375 price target

Colin Gillis wrote:

"We are reducing our estimates for the March quarter to reflect the negative impact of currency, and our view that the company is going to sustain its investment cycle regardless of overall profitability. We are broadly more positive on Amazon's business as it grows the entire Prime ecosystem, including the cross sell between its customer base for physical and digital goods offering."

"We estimate revenue for the March quarter to be $21.9B, which is growth of 11 percent YoY. Our revenue estimate compares to consensus estimates of $22.4B. Our loss per share estimate of $0.19 compares to earnings per share of $0.23 in the prior year and of $0.45 in the prior quarter and is below consensus loss per share estimate of $0.12."

JMP Securities: Market Perform, price target not available

Ronald Josey wrote:

"We expect Amazon to report results that are in line with our projections,which are 1 percent above consensus on revenue. Going into 1Q earnings, we believe there are multiple potential catalysts for Amazon, including the release of AWS financials and the lapping of the Japan consumption tax and AWS pricing cuts of 2Q14, offset by continued investments, challenging growth dynamics within media, and FX."

The analysts project revenue of $22.6 billion.

Benchmark: Buy, $425 price target

Daniel Kurnos wrote:

"We are essentially in line with consensus at $22.4 billion in revenue, up 13 percent y/y, and slightly ahead of the street on OIBDA ($1.93 billion vs. $1.82 billion) and adjusted EPS ($0.67 vs. $0.62). From an operating standpoint, Q1 is the least meaningful quarter, and we wouldn't be surprised to see some modest downside to our forecast due to fluctuating FX rates and more front-end loaded investment spending than forecast, possibly offset by higher unit growth….We believe AWS may begin the year pacing slightly below a $6 billion run-rate, with profit margins likely in the single-digit range, although that assumes a significant level of ongoing investment spend and is not representative of our long-term margin expectations."

Latest Ratings for AMZN

DateFirmActionFromTo
Apr 2017BenchmarkReiteratesBuyBuy
Apr 2017Pacific CrestDowngradesOverweightSector Weight
Apr 2017Raymond JamesDowngradesOutperformMarket Perform

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