Proactive Investors - Amazon.com Inc (NASDAQ:AMZN strong performance over the holiday period has prompted analysts at Wedbush to modestly raise their fourth quarter projections ahead of the eCommerce giant’s results due on February 1.
The analysts see 4Q revenue of $170 billion, an 11.9% year-over-year increase and up 0.6% from their previous estimate.
Wall Street analysts on average expect Amazon to report revenue of $166.1 billion and earnings per share of $0.79, according to Zacks Consensus Estimate.
The Wedbush analysts also see Amazon's 4Q operating income exceeding management’s guidance range of $7 billion to $11 billion and the Wall Street consensus.
They project 4Q operating income of $11.5 billion with a 6.9% margin, an increase of 4.6% from their previous estimate.
This is 12% above the consensus estimate and implies $313 million of sequential operating income when compared to the third quarter.
“Operating margin expansion is supported by rising fulfillment utilization, easing inflation, limited corporate headcount growth, and continued mix shift to higher-margin advertising revenue,” the analysts wrote in a note to clients.
“With strong topline trends in place during 4Q across Amazon’s retail and advertising segments (supported by our recent survey work) and management’s ongoing cost discipline and commitment to margin expansion, our bias for 4Q operating income is to the upside and we are raising our estimates accordingly.”
Other areas of focus for the analysts heading into Amazon’s results are the pace of its retail margin expansion amid recent layoffs, advertising revenue growth and the upcoming launch of Prime Video ads, and trends at Amazon Web Services (AWS) with growth set to accelerate in 2024.
They reiterated that Amazon remains their top stock pick across their internet coverage and maintained their ‘Outperform’ rating and $210 price target.
“We think Amazon is notably well positioned in 2024 with rising margins, ongoing strength in its high-margin advertising business, and accelerating AWS growth which is yet to emerge in reported numbers but should take shape as the year progresses,” they wrote.
Amazon shares traded hands at $153 on Friday morning.