Proactive Investors - Amazon.com Inc (NASDAQ:AMZN, ETR:AMZ) is expected to deliver a positive first quarter update on Tuesday April 30, as it showcases the strengths of its web and ad services, analysts believe.
Bank of America (NYSE:BAC) predicts revenue will reach US$143 billion for the quarter while underlying earnings come in at US$11.5 billion.
Sales guidance keeps in line with Wall Street estimates but earnings forecasts are slightly higher than the market’s prediction of US$11.3 billion.
Both Amazon Web Services and its advertising segment are expected to come in on the upside of Wall Street guidance, BoA says, while the bank also sees potential for a retail earnings beat.
“We expect a 1Q beat, and while 2Q set up has some unusual q/q hurdles, we expect positive 1Q metrics and call commentary to be constructive,” Bank of America said.
“Given expanding retail margins, (robust ad growth with a likely 1Q boost), and expected AWS acceleration, we think the stock is still set up for multiple expansion in 2024.”
Looking towards the second quarter, analysts at the bank believe Amazon could suffer from a slight deceleration in the retail industry, but are confident its margin set-up can help offset this.
Despite industry data indicating US e-commerce growth is accelerating, analysts warned that the second quarter may be weaker due to Easter and the “Big Spring Sale” taking place in the first quarter.
Analysts at the bank maintain a 'Buy' rating for the stock and target a US$204 share price.
Shares of Amazon traded around 0.7% lower on Tuesday afternoon ahead of the earnings release.
--Updates with share price--