, Inc (AMZN) Q1 Beat Just Around The Corner?

World’s top online retailer, Inc. (NASDAQ:AMZN) is expected to release its first quarterly earnings report for the year on April 27th and Maxim analyst Tom Forte is looking for an earnings beat. Therefore, the analyst reiterates a Buy rating on AMZN while increasing the target price from $940 to $1,000, which represents an approximate 11% upside from the shares last traded.

For the first quarter of 2017, Forte predicts the leading online retailer’s sales to climb 19.1% to $34.7B, below the previous quarter’s sales growth of 22.4% and under consensus expectations of $35.3B. However, the analyst’s estimate hits just over AMZN management’s outlook range at the midpoint between $33.3B-$35.8B. Additionally, the analyst forecasts an adjusted EBITDA of $4.4B, marking 28.1% year-over-year growth, while consensus expectations stand at $4.0B. Forte looks for EPS to reach $2.04, pointing out that this is “significantly higher” when compared to the consensus projection of $1.14.

However, the analyst advises to stay alert as he “monitor[s] the increasing potential for lumpiness in the sales growth rates for Amazon Web Services, due to increased competition from Google and Microsoft and, to that end, will be listening for details on the call regarding the current competitive landscape.”

Ahead of the quarterly update, the analyst notes, “[…] we will be listening for additional details on its advertising sales efforts, which could provide a short-term boost to revenues and margins as it expands the effort.”

“We anticipate 2Q17 guidance to reflect a continuation of significant investment spending across multiple initiatives, including Alexa, category expansion (groceries), content, international expansion (India), and physical stores,” continues the analyst.

Overall, Forte concludes, “We believe an increasing mix of third-party sales on its platform and the benefits from the company raising prices on its Fulfillment by Amazon service in early 2016, which has improved the yield on its FCs, will drive the profitability upside in the quarter.”

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, a financial engine that measures and ranks analysts’ and bloggers’ performance, Tom Forte is ranked #4398 out of #4559 analysts. Forte has a 34% success rate and generates an annual yield of -10.7%. However, when recommending AMZN, the analyst earns a 16.7% average profit on the stock.

TipRanks analytics show AMZN as a Strong Buy. Based on 33 analysts offering recommendations for this share, 32 issue a Buy and 1 maintains a Hold. The 12-month average price target stands at $980.87, making a nearly 9% upside from where the stock is currently trading.

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