Yahoo Finance AMZN Stock: What to Expect from Amazon.com, Inc. Earnings
Amazon.com, Inc. (Nasdaq: AMZN) stock is off to a red-hot start to 2018, gaining 24.3 percent year-to-date. The big market gains make the company's first-quarter earnings report on April 26 even more critical, and analysts have mixed opinions of what investors should expect.
When it comes to headline numbers, consensus Wall Street estimates are calling for adjusted earnings per share of $1.27 on revenue of $49.8 billion for Amazon.
[See: 7 of the Best Tech Stocks to Buy for 2018.]
However, investor expectations have likely been creeping higher heading into earnings after Amazon disclosed in its annual shareholder letter last week that it currently has 100 million Prime subscribers, well ahead of consensus expectations of around 80 million.
Despite the impressive Prime subscriber growth, rising costs have been a headwind for Alphabet ( GOOG, GOOGL) and other high-growth companies this earnings season, and analysts say Amazon is dealing with its own set of costs in 2018. According to KeyBanc analyst Edward Yruma, fulfillment costs likely jumped 57 percent in the first quarter, and 2018 will be a heavy investment year for Whole Foods.
At the same time, Yruma says Prime membership growth, average revenue per Prime user and AWS usage are all driving impressive revenue growth for Amazon. KeyBanc projects that Amazon can double its market-leading AWS cloud revenue from its current $20 billion annual run rate to a run rate of $41 billion by 2020.
KeyBanc is expecting a first-quarter revenue beat of $50.3 billion but an EPS miss of $1.17 as rising costs eat into profits. Yruma says Amazon is one of the most disruptive forces in the retail industry today, but the stock's valuation leaves little room for upside at the moment.
"We think it should continue to take market share and also benefit as total share accorded to e-commerce continues to grow," Yruma says. "We think valuation is full."
[See: 8 Catalysts That Are Moving Amazon Stock.]
Bank of America analyst Justin Post is also expecting a revenue beat of $50.4 billion and an EPS miss of $1.15. Post is more optimistic about the Amazon stock's outlook for the rest of the year.
"We think strong growth of Amazon's higher margin businesses (cloud, advertising) will be the key takeaway from 1Q and can drive the stock higher in 2018," he says.
KeyBanc has a "sector weight" rating for Amazon. Bank of America has a "buy" rating and $1,650 price target for AMZN stock.
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