Amazon Just Had Its Best Holiday Season Ever, S&P Capital IQ Analyst Says

Amazon.com, Inc. AMZN is on the doorstep of its fourth quarter earnings report and shares are rising hours before the data. Tuna Amobi of S&P Capital IQ was recently on CNBC discussing his thoughts on the e-commerce giant.

"I'm expecting to hear very strong results," Amobi said. "By all accounts, we think Q4 was Amazon's best holiday season ever on any number of metrics." The company is expected to see strength in Prime membership growth, U.S. and international sales, and Amazon Web Services (AWS) "traction."

Cloud Traction And International Potential

In recent quarters, Amazon shares have moved off AWS-specific data points, a phenomenon Amobi touched on. "I expect the affirmation of what we believe to be very strong long-term prospects for [AWS]," he said.

Operating margins "are surprising" analysts to the high-side, making it a potential catalyst.

India is "particularly" strong in terms of potential upside, the analyst said, adding that revenue potential in China and India is large; Amazon and AWS are investing in these areas.

Looking Ahead

"The biggest challenge [for Amazon investors] is trying to predict the company's investment swings," which range from R&D bets on original content, hardware and cloud. "Investors have taken a longer-term view on these investments."

Amobi said he's maintained a Buy rating on Amazon with a target price of $685. Price-to-sales multiples show Amazon is still "attractive" compared to competitors, he concluded.