Holiday Sales Provide Insight into Amazon.com, Inc. (AMZN) Ahead of 4Q Earnings: Top Analyst


Top analyst Youssef Squali at Cantor is anticipating a robust fourth quarter for Amazon.com, Inc. (NASDAQ:AMZN) on back of a stellar holiday season and positive fourth-quarter checks. Therefore, in his bullish preview for the online and e-commerce leader, the analyst reiterates an Overweight rating on shares of AMZN with a $1,000 price target, which represents a 20% increase from where the stock is currently trading.

Particularly, the analyst models “robust top-line growth,” with expectations that results should align with FactSet consensus of a 25% year-over-year rise in revenue to $44.69 billion as well as $1.38 8in EPS. The analyst is nearly as confident, calling for $4.26 billion in revenue and $1.26 in EPS, adding that Street EPS differs from $0.56 to $1.86 per share. Guidance calls for $42.0 to $45.5 billion in revenue. Squali anticipates 33%T of gross margin, which denotes a 110 bps rise in year-over-year, which he attributes to an elevated mix of Amazon Web Services (AWS), 3P, and digital.

Additionally, the analyst believes forex will impact a revenue headwind circling $334 million as well as negatively impact EPS by around $0.02.

Checks show Amazon continues full bullish steam ahead. Thanks to the holiday season, which the analyst believes indicated a 16% to 18% surge of growth in overall domestic ecommerce, he notes, “comScore data shows that Amazon consistently ranked as the most visited retail site over the holidays, which should translate into healthy sales growth, in our view. We also view Alphabet’s solid 4Q16 performance last week (fueled by online ad spending) and the pickup in eBay’s 4Q Marketplace GMV positively for AMZN.”

“We expect a strong performance with ~25%+ Y/Y revenue growth, driven by a growing share of retail, robust 3P and AWS businesses, all amid a strong online holiday season. Our checks indicate a pickup in e-commerce growth in 4Q, with mobile seeing particularly strong growth during peak shopping days (Thanksgiving-Cyber Monday). Given its size, loyal and growing base of Prime members and ever-improving customer value proposition, we view Amazon as one of the prime beneficiaries of such a trend,” Squali contends.

Youssef Squali has a very good TipRanks score with a 73% success rate and a high ranking of #26 out of 4,378 analysts. Squali yields 13.5% in his annual returns. When recommending AMZN, Squali realizes 38.5% in average profits on the stock.

TipRanks analytics demonstrate AMZN as a Strong Buy. Out of 24 analysts polled by TipRanks in the last 3 months, 23 are bullish on Amazon stock and 1 remains sidelined. With a return potential of 13%, the stock’s consensus target price stands at $944.48.

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