earnings are 10 days away, and at least one analyst expects big things.
Loop Capital Markets analyst Anthony Chukumba, who reiterated a Buy rating and $2,200 price target on Amazon stock (ticker: AMZN) in a Monday note, forecasts earnings per share of $4.78—topping Wall Street consensus figures.
Analysts polled by FactSet expect Amazon to report earnings of $4.71 per share and revenue of $59.7 billion when it releases its fiscal first-quarter results after the market closes April 25. (In the same quarter a year ago, Amazon earned $3.27 per share on sales of $51 billion.)
“Our 1Q 2019, 2019, and 2020 diluted EPS estimates are above consensus, which reflects more optimistic profitability expectations,” Chukumba wrote.
Amazon Web Services is expected to fuel the growth, as has been the case in recent quarters. Chukumba is pinning his EPS estimate on a 16% jump in net sales, driven largely by a 40% jump in AWS sales. In the December quarter, AWS sales soared 45% to $7.43 billion.
The rapid adoption of cloud computing, which has spurred AWS’ growth, is bound to keep benefiting its two biggest players, Amazon and
(MSFT). KeyBanc Capital Markets analyst Brent Bracelin predicts a $300 billion jump in sales in the market within five years.
In addition to AWS, Loop analyst Chukumba expects to see more gains in Amazon’s fast-growing advertising business as well as more details from Amazon management on its cashier-less Go grocery store chain. A recent report in Bloomberg said the company intends to open as many as 3,000 of the stores by 2021. (It currently has 10 Go stores in Seattle, San Francisco, and Chicago. Amazon declined to comment on the report.)
“As a company grows, everything needs to scale, including the size of your failed experiments,” Amazon Chief Executive Jeff Bezos said in a letter to shareholders last week. “If the size of your failures isn’t growing, you’re not going to be inventing at a size that can actually move the needle. Amazon will be experimenting at the right scale for a company of our size if we occasionally have multibillion-dollar failures.”
Still, Amazon stock doesn’t come without some risk, Chukumba warned. He pointed to growing competition from other online and bricks-and-mortar retailers, and from cloud computing rivals; increased government regulation over antitrust issues; weakness in U.S. consumer spending; and potential changes to management.
Write to Jon Swartz at [email protected]