Amazon.com Inc. (NASDAQ: AMZN) will report its fourth-quarter earnings Thursday after the markets close. Thomson Reuters has consensus estimates of $0.17 in earnings per share (EPS) and $29.67 billion in revenue. In the fourth quarter of the previous year, Amazon posted $0.51 in EPS and $25.59 billion in revenue.
Source: Amazon.com Inc.
Citigroup made a call on Amazon that talked up its attractive valuation, as well as top-line growth and more stable margins. On valuation, there appears to be a good risk-reward and valuation support near $300, as well as upside to at least $354 without assuming multiple expansion. Strong online holiday shopping data are expected to be favorable for fourth-quarter results.
Another independent research firm, Argus, noted that Amazon shares have faced pressure due to the failure of the Fire Phone and the much heralded market debut of Chinese e-commerce giant, Alibaba, in 2014. The firm maintained in the call that it does not believe that Amazon’s competitive position has eroded, and it showed that the Kindle platform and Prime membership program continue to grow. Another benefit is that Amazon’s return on capital is improving.
In the days ahead of earnings, analysts have made calls for Amazon:
- B. Riley reiterated a Neutral rating with a price target of $296.
- J.P. Morgan had a Neutral rating but increased its price target to $323 from $307.
- RBC Capital had an Outperform rating and lowered its price target to $410 from $420.
The highest listed analyst price target comes from Argus at $450, which implies an upside of 48.1% from Wednesday’s close.
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The 50-day moving average is currently $309.27. It was acting as resistance for most of the fourth quarter and even at inflection points in the new year. The 200-day moving average is $317.95.
On Thursday morning, shares of Amazon traded down 1% at $300.56. The stock has a consensus analyst price target of $359.11 and a 52-week trading range of $284.00 to $406.25.
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