'Expect results well above consensus': Here's what 4 Wall Street banks expect from Amazon's 4th-quarter earnings report
- Amazon will report fourth-quarter earnings after market close on Tuesday.
- Analysts are expecting the company to outperform as Amazon Web Services continues to dominate.
- Here's what four big bank analysts expect from Amazon when the company reports earnings after Tuesday's market close.
Amazon is set to report fourth-quarter earnings after the market closes on Tuesday, and analysts expect the company to outperform with strong e-commerce and public cloud trends continuing to date.
Over the past year, Amazon has benefitted on the consumer side from an increase in e-commerce spending due to the pandemic, while the company's business to business services, including Amazon Web Services (AWS), have thrived amid increasing enterprise IT investments.
Investors are likely looking to see just how much Amazon's top line benefitted from the tailwinds throughout the year, or if they slowed in the fourth quarter.
Consensus estimates are for Amazon to report a fourth-quarter profit of $7.00 per-share on $119.6 billion in revenue.
Amazon closed at $3,326.95 on Monday, up roughly 4% year-to-date.
Here's what four Wall Street analysts expect from the company's earnings report, from e-commerce sales to cloud services.
Deutsche Bank: The Street may be 'underestimating top-line growth'
The team at Deutsche Bank, led by Lloyd Walmsley, raised top-line estimates in the near-term "as pandemic-related disruptions continue into the new year."
The analysts expect Amazon to slightly beat the Street's revenue estimates for the quarter despite a deceleration in US e-commerce spending, as the quarter's results will be buoyed by the move of Prime Day into the fourth quarter.
Deutsche Bank is forecasting 37% year-over-year total revenue growth with the closely-watched AWS revenue growth expected to be in line with estimates, growing 28% vs. the year-ago period. The firm also predicts EPS to be $7.07 vs. $6.58 in the same period a year ago.
Going forward DB sees "potential new offerings around Amazon Logistics/Shipping, Pharmacy/healthcare, expanded product around advertising, and continued growth in Cloud all helping to drive long term growth from Amazon on top of its retail business."
The firm did say Amazon RX remains "a work in progress" for now, but it believes the service will help boost the company going forward.
DB analysts hold a "buy" rating on Amazon and maintain their price target of $4,050.
Goldman Sachs: Expect results 'well above consensus' driven by Retail, Advertising, and AWS
Analysts at Goldman Sachs, led by Heath Terry, CFA, expect revenues at Amazon to surpass $121 billion in the quarter, up 40% year-over-year.
Driven by the "rising adoption of online retail over the last nine months, constraints on traditional retail amplified by the holiday season, and stronger than expected holiday spending" Goldman sees a street beating quarter in the works.
The bank continues to guide conservatively around operating income expecting Amazon to hit just 4.1% of sales or $4.9 billion in operating income during the quarter due to labor costs and logistical disruptions related to COVID-19.
Still, Goldman sees Amazon advertising outperforming significantly. "Our checks during the quarter within the advertising ecosystem suggest a meaningful acceleration in e-commerce channels. One partner noted that holiday season volume propelled its e-commerce channel up significantly over Q3 as impressions increased more than 100% y/y in Q4," analysts said.
The firm also expects Amazon to outperform when it comes to the cloud as "digital transformation remains a priority" for companies in 2021.
Goldman analysts reiterated their "buy" rating and $4,200 price target.
Credit Suisse: 'Reprogrammed' consumer to spend more online
Analysts at Credit Suisse, led by Stephen Ju, raised their North American GMV growth forecast to 40% from 36% citing better than anticipated e-commerce growth.
Credit Suisse isn't quite as bullish on AWS as other Banks however. The firm expects 26% revenue growth out of the business segment versus 28% estimated by most peers.
However, Credit Suisse notes that Amazon has "stepped up its sq ft/logistics infrastructure investments in a bid to protect user/activity gains with superior customer service. This places Amazon in a more offensive footing relative to its mega-cap Internet peers, as it is in a better position to capture the e-commerce/online purchase use case in the minds of consumers."
Credit Suisse holds an "outperform" rating for Amazon and the firm increased its price target to $3,860 from $3,750 in its latest report.
JPMorgan: Raising estimates on strong e-commerce, cloud trends
Analysts at JPMorgan, led by Doug Anmuth, "remain bullish on AMZN, with strong e-commerce & public cloud trends continuing to date & AMZN well-positioned as the clear leader in both."
JPMorgan says the company does face tough comps from the year-ago period but expects the company's "multi-year head start in the cloud" to allow them to outperform. Amazon currently holds over 40% global market share in cloud web services.
The main highlight of the JPMorgan note is the firm's enthusiasm regarding Amazon's profit potential going forward. "Amazon is also starting to show more profit, with its high-growing AWS and Advertising revenue streams also its most profitable," analysts said.
JPMorgan holds an "overweight" rating on Amazon with a price target of $4,155.