Technology

What to Expect From Amazon Earnings

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Amazon.com Inc. (NASDAQ: AMZN) is scheduled to report its second-quarter financial results after the markets close on Thursday. The company has made a huge splash in the markets so far in 2016 as a major disrupter in the retail industry. The stock’s performance might not completely reflect this, but shares are still up. These earnings could very well be the jumping off point for which Amazon is looking.

The Thomson Reuters consensus estimates for the quarter are $1.11 in earnings per share (EPS) on $29.55 billion in revenue. In the same period of last year, it posted EPS of $0.19 and $23.18 billion in revenue.

This company is now expected to beat expectations with reaccelerating top-line growth and continued market share gains. Another strength will be Amazon Web Services (AWS), despite growing competitive pressures. The company’s evolving fulfillment strategy is another strength, and Jefferies even said that Amazon may be the best-positioned large-cap internet name for the remainder of 2016.

Amazon launched Amazon Supply in 2012 and rebranded the initiative Amazon Business in April 2015. It is a marketplace that combines positive attributes of Amazon’s consumer marketplace — selection, convenience and value — with features and benefits tailored to businesses, government organizations and the education sectors.

With “hundreds of millions of products” in the industrial/scientific, packaging and shipping, food service, nursing, education, building and other supply categories and integration with procurement applications, analysts tend to think Amazon Business may be a bigger opportunity than the street realizes. The company recently indicated that Amazon Business reached $1 billion in sales in its first year, is serving 300,000 customers and had 20% month-over-month growth. Issues Amazon likely will need to address in the category are the need to build out more specialized procurement platforms/interfaces and offer specialized customer service, which will aid Amazon’s ability to compete versus well established competitors.

A few analysts weighed in on Amazon prior to the release of the earnings report:

  • Pacific Crest reiterated an Overweight rating with an $820 price target.
  • Cantor Fitzgerald reiterated a Buy rating with an $800 price target.
  • Evercore ISI reiterated a Buy rating with an $820 price target.
  • Wedbush has an Outperform rating and an $835 price target.
  • Canaccord Genuity reiterated a Buy rating with a $765 price target.
  • Goldman Sachs has a Buy rating and a $900 price target.
  • RBC Capital Markets reiterated an Outperform rating with an $800 price target.
  • Jefferies reiterated a Buy rating.
  • Merrill Lynch reiterated a Buy rating with an $840 price target.
  • JMP Securities reiterated a Buy rating.
  • Baird reiterated an Outperform rating with an $800.
  • Sanford Bernstein reiterated an Outperform rating.
  • Piper Jaffray reiterated an Overweight rating.
  • Citigroup reiterated a Buy rating with a $780 price target.
  • Morgan Stanley reiterated a Buy rating with an $800 price target.
  • Cowen reiterated an Outperform rating with an $830 price target.

So far in 2016, Amazon has outperformed the broad markets, with the stock up 9%. Over the past 52 weeks, the stock is actually up 40%.

Shares of Amazon were trading up 0.9% at $743.43 on Thursday, with a consensus analyst price target of $814.59 and a 52-week trading range of $451.00 to $757.34.

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