Amazon, Inc. AMZN is expected to report second-quarter earnings following market close on Thursday, July 29.
Consensus estimates project second-quarter EPS at $12.22 and revenue of $115.07 billion.
Credit Suisse's Amazon Takeaways
Amazon has been aggressively ramping up spending to accommodate the e-commerce boom, Credit Suisse analyst Stephen Ju in a Monday note.
The company has nearly tripled its spending on capacity additions to execute its planned 50% fulfillment center square footage increase and middle and last-mile delivery capabilities, said the analyst.
These increased capacity investments hint at Amazon potentially resuming its Prime one-day delivery expansion, which was 50% complete prior to the pandemic, he said.
Amazon has historically focused on delivery improvements through the deployment of additional fulfillment assets in the third quarter, further indicating the company could announce faster delivery options heading into the holidays, Ju said.
Amazon will likely see upside on future e-commerce franchise estimates resulting from a harvest period after a significant investment period, the analyst said.
In previewing Amazon’s second-quarter earnings call, Ju highlighted the following: e-commerce margins will likely expand with improved infrastructure; FCF growth may come in higher than expected due to Amazon’s ad segment; and an “upward bias to AWS revenue forecasts” with a more moderate deceleration path.
Credit Suisse Revises Amazon Estimates, Price Target
Ju revised his expected FY21 and FY22 forecasts from $76.81 to $76.33 and $129.65 to $124.87.
The analyst maintained an Outperform rating on Amazon and increased the price target from $4,000 to $4,850.
The new price target was based on a DCF using a 10.5% WACC and a 3% terminal growth rate.
AMZN Price Action: Amazon was up 1.18% to $3,699.82 at the close Monday.
Photo: courtesy of Amazon.
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