Amazon.com, Inc. (Nasdaq: AMZN) investors are hoping the recent news of 100 million Prime subscribers foreshadows some more big numbers when the company reports first-quarter earnings on April 26.
Wall Street analysts are as optimistic as ever about Amazon’s future, and the company is well-positioned to take on the next wave of e-commerce growth.
[See: 7 of the Best Tech Stocks to Buy for 2018.]
According to Credit Suisse analyst Stephen Ju, investors shouldn’t expect any surprises out of Amazon in the first quarter or throughout the rest of 2018. With the stock already up 30 percent year-to-date, no surprises are a good thing.
Ju says the e-commerce business is entering its next growth stage, and there’s no company better-positioned to take advantage than Amazon.
“E-commerce growth for the next two decades will hinge on harder-to-handle non-homogeneous product verticals, and Amazon is one of the best positioned to capture the next wave of retail dollars coming online from offline given its product innovation/iteration track record,” Ju says.
Ju says there’s a particularly large opportunity in the shift of grocery and apparel sales from offline to online.
“Apparel and groceries remain large pools of dollars still left to come online, and Prime Wardrobe and the linkup between [Whole Foods] content and Prime Now distribution will serve as the spearheads to address those opportunities,” Ju says.
Ju says Amazon stock has a number of near-term catalysts as well, including new fulfillment center openings, accelerating advertising revenue growth and rising subscription revenue from its media content.
In the longer term, Ju anticipates e-commerce operating margin expansion, shipping loss moderation and potential upside to Amazon Web Services revenue forecasts.
For the first quarter, Credit Suisse expects Amazon to report earnings per share of $2.93, well above consensus estimates of $1.26. However, Credit Suisse is expecting first-quarter revenue of $48.8 billion, slightly below consensus estimates of $49.8 billion.
Morgan Stanley analyst Brian Nowak is expecting a 2 percent revenue beat and an 18 percent beat on consolidated segment operating income.
[See: 8 Catalysts That Are Moving Amazon Stock.]
“High margin revenue streams likely will provide a growing pool of gross profit dollars, enabling AMZN to deliver upward revisions even through record and accelerating investment,” Nowak says.
Morgan Stanley is also calling for first-quarter subscription revenue growth of 50 percent, other/advertising revenue growth of 50 percent and AWS revenue growth of 42 percent.
Credit Suisse has an “outperform” rating and $1,800 price target for Amazon. Morgan Stanley has an “overweight” rating and $1,550 target for AMZN stock.
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Amazon.com, Inc. (AMZN) Preps For Next Phase of E-Commerce Growth originally appeared on usnews.com
