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Amazon Q3 Earnings Preview: What Can We Expect?
Stock Analysis & Ideas

Amazon Q3 Earnings Preview: What Can We Expect?

The big tech stalwart Amazon (AMZN) is scheduled to report third-quarter 2021 earnings on October 28, after the market closes.

Over the past year, shares of the e-commerce giant have jumped only about 3%, and are now trading at over $3,376. Solid Q3 results might propel the stock price upward, so let’s take a closer look at what analysts on the Street are expecting.

Analysts, on average, expect Amazon to post adjusted earnings of $9.10 per share and revenues of $111.63 billion for Q3.

Meanwhile, the Earnings Whisper number, or the Street’s unofficial view on earnings, stands at $12.10 per share. (See AMZN Dividend Date and History on TipRanks)

Prior Quarter Snapshot

Amazon’s second-quarter results were mixed, with profitability above projections, but revenues and third-quarter guidance falling short of analysts’ predictions.

Although net sales increased by 27% to $113.1 billion, they fell short of analysts’ estimates of $115.07 billion.

Meanwhile, adjusted profits per diluted share of $15.12 rose 46.8% year over year, demonstrating the company’s strong growth and outstanding operating leverage.

See Analysts’ Top Stocks on TipRanks >>

What Will Be in Q3?

Amazon is a company that is known and loved by consumers the world over. It may be found in practically every facet of daily life. E-commerce, streaming services, cloud computing, and food retail are a handful of the ways it earns money.

When it comes to Amazon’s e-commerce business, continuous growth in Prime, rapid delivery services, and other development plans could help the company to deliver strong numbers. However, maintaining COVID-19-level e-commerce business growth rates could prove difficult for the company.

Then there’s Amazon’s video-on-demand service. Prime Video’s strong momentum, fueled by a rush of new content, is expected to be a substantial tailwind in the next quarter.

Apart from the aforementioned factors, investors should keep an eye on Amazon Web Services (AWS), the company’s cloud computing division.

Without a question, this AWS division is becoming stronger, profitable, and bigger with time.

AWS, in particular, had a robust growth rate in the most recent quarter, with revenue up 37% year-over-year to $14.81 billion in Q2. As the company’s client base, alliances, data center network, and the number of AWS regions expand, AWS sales should continue to skyrocket.

Despite these advantages, one should keep in mind that, like other firms, the internet e-tailer is not immune to global supply chain issues and severe logistical challenges. Amazon’s tremendous investment in warehouses and logistics, on the other hand, should undoubtedly help it develop innovative ways to get things to people who want them.

Analyst Recommendations on Amazon

Analysts are generally enthusiastic about the stock, giving it 31 unanimous Buy recommendations, which is unusual for a widely-followed company.

In particular, Justin Post of Bank of America Securities, ahead of the Q3 earnings announcement, maintained a Buy rating on the stock and a price target of $4,250.00.

Post believes that “with a vast warehousing and logistics network, and a healthy 3P marketplace, Amazon may be more insulated from supply chain constraints than competitors.”

However, he does anticipate the firm to present a cautious viewpoint for Q4, due to “fulfilment investments, inventory constraints and tight labor market that could impact shipping times.”

As for price targets, the average AMZN price target of $4,180.13 implies 23.8% upside potential from the current levels.

Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.

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