Amazon (NASDAQ:AMZN) is nearing the time to report its Q3 ’24 earnings, with the e-commerce giant releasing its latest financial statements once the market settles down on Thursday (October 31). It’s planned.
After a mixed second quarter that saw Amazon’s stock fall, investors are now focused on whether the company can deliver more favorable results this time around. The results are still pending, but at least one prominent market player seems optimistic as the announcement approaches.
Ark Invest CEO Cathie Wood was busy loading up on AMZN stock in October, purchasing 238,892 shares through the ARKK, ARKQ, and ARKW ETFs. That harvest is currently worth about $46 million.
Wood is not alone in expressing confidence that Amazon is on its way to profitability. Evercore’s Mark Mahaney, an analyst ranked in the top 1% of Street stock experts, has a lot of good things to say about the company.
“Amazon remains our top large-cap stock for the 12-month period as we believe AWS is returning to sustainable premium revenue growth (20%); Amazon’s retail segment remains “It’s a notable share gainer, and core retail operating margins should continue to rise.” “Amazon’s ad revenue is growing well, and APV brings Amazon’s ad revenue to a positive inflection point.” AMZN will likely benefit from a continued mix shift towards higher margin and higher growth cloud and advertising revenues,” Mahaney said.
As for what to expect from those numbers, Mahaney predicts revenue of $157 billion, GAAP operating income of $14.8 billion (9.4% margin) and GAAP EPS of $1.26. This places his estimate near the higher end of Amazon’s guidance range of $154 to $158.5. Sales are $1 billion and operating income is $11.5 billion to $15 billion. These numbers are also broadly in line with Wall Street’s expectations for revenue of $157.2 billion, operating profit of $14.7 billion, and EPS of $1.14.
Consensus forecasts are for fourth-quarter sales to increase 18% sequentially, which Mahaney said is plausible, but “not conservative.”
The difference between Mahaney and the Street is fourth-quarter operating profit, with the consensus at about $17.5 billion, while Mahaney expects it to be nearly $1 billion lower at $16.6 billion. “We believe the OI risk this fourth quarter is well seasoned among investors,” analysts said on the matter, adding, “However, with or without significant launch costs for Kuiper, “Street numbers still appear to be inherently bullish.”
Despite this, Mahaney doesn’t believe there are any “structural issues” and expects solid operating margin expansion of more than 100 bps, even after taking into account Kuiper’s $300 million in operating costs. Still predicting.
Overall, Mahaney rates AMZN stock an Outperform (i.e. Buy) and has a price target of $240, implying a 24.5% upside for the stock from current levels. (Click here to see Mahaney’s track record)
The Street’s average price target is a bit more modest, but the $224.14 level still suggests the stock has room for up to 16% growth over the next year. Analyst consensus rates the stock a Strong Buy, based on a lopsided mix of 46 Buys to 2 Holds. (See Amazon stock price forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. Content is for informational purposes only. It is very important to perform your own analysis before making any investment.
