The tech giants are out in numbers this week with many of the market leaders reporting Q3 earnings. Amongst them will be Amazon (NASDAQ:AMZN) with the ecommerce behemoth slated to deliver its third-quarter financial statement on Thursday (Oct 26) after the close.
Looking ahead to the results, Monness’ Brian White, a 5-star analyst ranked in the top 1% of Street experts, is looking for Amazon to deliver revenues of $142.34 billion (above the Street at $141.43 billion). White’s figure factors in a 12% year-over-year increase, which represents a “slight acceleration” from the 11% uptick seen in Q2, but not quite at the level of the the 15% growth posted in the year-ago period. On a sequential basis, the Q3 revenue forecast amounts to a 6% quarter-over-quarter improvement, which is a tad higher than the four-year, September quarter average of +5%.
White is calling for operating income of $8.46 billion and a 5.9% operating margin and at the bottom-line, projects EPS of $0.63 (also higher than consensus at $0.58). However, White also notes that as Amazon has “demonstrated in the past, EPS is susceptible to quarterly swings in the share price of Rivian Automotive and non-operating charges.”
Amazon for its part has guided for Q3 revenue between $138.0-143.0 billion and operating income between $5.5 billion to $8.5 billion.
Moving forward to the holiday season quarter, for Q4, White estimates sales of $174.13 billion (a 17% year-over-year increase and above the Street at $166.67 billion) and EPS of $0.76, also higher than consensus at $0.66.
Summing up, while White sees Amazon as a long-term winner, he signs off with a warning about what might be coming next. “We believe Amazon is well positioned to benefit from digital transformation, capitalize on the cloud, innovate with AI, participate in new healthcare-related opportunities, and leverage a leaner cost structure,” said the 5-star analyst. “However, regulatory headwinds have grown stronger this year, and we believe the darkest days of this downturn are ahead of us.”
Nevertheless, White remains onside, touting a Buy rating along with a $170 price target, implying shares will generate returns of 32% in the months ahead. (To watch White’s track record, click here)
Overall, the bulls are out in heavy attendance for AMZN. Barring a single Hold rating, all 42 other analysts who issued a research report over the last 3 months, recommend the stock as a Buy. With an average price target of $174.67, the analysts foresee further upside of ~36% in the months ahead. (See Amazon stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
