E-commerce and cloud computing giant Amazon (AMZN) will report its fourth-quarter results after the closing bell today. The stock has been on fire recently, delivering a market-stomping 14% this month to build an $834 billion market cap.
Investors and analysts will pay close attention to Amazon’s report, hoping to glean insights worthy of an investment thesis from the company’s financial data and management’s comments. The report will be packed with enough data to confound and befuddle the unprepared investor. To help you make the most of Amazon’s event, RBC’s top analyst Mark Mahaney weighs in with a few expectations.
For the December quarter, Mahaney expects $70.9 billion in Revenue, $3.5 billion in GAAP Operating income and $5.49 in GAAP EPS. Looking ahead, the analyst forecasts Q1 sales of $59 billion, $3.39 billion in GAAP Operating income and $5.32 in GAAP EPS.
Mahaney noted, “While we believe the Street has been concerned about the Revenue growth deceleration implied in the Q4 guidance, we believe several factors effectively explain the Q4 outlook: a material change in FX assumptions, the ongoing de-seasonalization of AMZN’s retail segment as it has evolved from a purely consumer discretionary company to more of a consumer staples company, and the full-year integration of Whole Foods. Note that over the last five years, AMZN’s revenue growth has consistently decelerated notably in Q4, only to reaccelerate in Q1.”
“AMZN remains an internet staple, in our view. 65 straight quarters (except for 1 qtr) of 20%+ organic Rev. Growth, though Profitability has admittedly been…uneven. We also believe AMZN’s Core Retail biz is benefiting from scale efficiencies. And AMZN’s Growth Outlook is arguably the strongest of the Major ‘Net Platforms, because it faces the Largest (and Least Penetrated) TAMs,” the analyst added.
As such, Mahaney reiterates an Outperform rating on Amazon shares, with a price target of $2,300, which represents a potential upside of 35% from where the stock is currently trading.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Mahaney has a yearly average return of 21.7% and a 64% success rate. Mahaney has a 34.2% average return when recommending AMZN, and is ranked #35 out of 5140 analysts.
Mahaney is certainly not the first analyst with an optimistic outlook for the retail leader, as TipRanks analytics showcasing AMZN stock as a Strong Buy. With an average price target of $2,132, analysts are predicting an upside of nearly 25%. In total, the stock has received 28 ‘buy’ ratings vs. just 1 ‘hold’ in the last three months. (See AMZN’s price targets and analyst ratings on TipRanks)