It’s almost time for Amazon (NASDAQ:AMZN) to report 3Q24 earnings, with the ecommerce giant slated to release its latest financial statement once the market action comes to a halt on Thursday (October 31).
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Following a mixed Q2 that saw a dip in Amazon’s share price, investors are now looking to see if the company can offer a more favorable outcome this time. While the results are still up in the air, at least one prominent market figure appears optimistic as the release draws near.
Ark Invest CEO Cathie Wood has been busy loading up on AMZN stock in October, purchasing 238,892 shares via her ARKK, ARKQ and ARKW ETFs. That haul is currently worth about $46 million.
Wood is not the only one showing confidence in Amazon heading into earnings. Evercore’s Mark Mahaney, an analyst ranked in the top 1% of Street stock experts, has plenty of good things to say about the company.
“Amazon remains our Top Large Cap Long with a 12 month horizon, as we believe AWS is recovering to sustainable, premium revenue growth (20%), Amazon’s Retail segment should continue to be a notable share gainer, core Retail Operating Margins should continue to expand nicely, Amazon’s Ad Revenue is likely to hit a positive inflection point thanks to APV, and AMZN will benefit from the ongoing mix shift to higher-margin, higher growth Cloud & Advertising revenue,” Mahaney opined.
As for what to expect from the numbers, Mahaney forecasts revenue of $157 billion, GAAP operating income of $14.8 billion (a 9.4% margin), and GAAP EPS of $1.26 – positioning his estimates toward the higher end of Amazon’s guidance range of $154 to $158.5 billion in revenue and $11.5 to $15 billion in operating income. These figures also align closely with Wall Street’s estimates of $157.2 billion in revenue, $14.7 billion in operating income, and $1.14 in EPS.
Consensus expectations have Q4 revenue climbing sequentially by 18%, which Mahaney says is plausible, although “not conservative.”
Where Mahaney and the Street differ is on Q4 Operating Income, with consensus at ~$17.5 billion but Mahaney almost $1 billion below, forecasting $16.6 billion. “We believe this Q4 OI risk has been well seasoned among investors,” said the analyst on the matter, “but the Street number still seems intrinsically aggressive, with or without material Kuiper launch costs.”
Nevertheless, Mahaney doesn’t consider there to be “any structural issues,” and still anticipates a robust expansion for Operating Margin of more than 100bps, even when factoring in Kuiper operating costs of $300 million.
All told, Mahaney rates AMZN shares an Outperform (i.e., Buy), with a $240 price target, implying the stock will climb 24.5% above current levels. (To watch Mahaney’s track record, click here)
The Street’s average price target is a little more modest, but at $224.14 still suggests shares have room for ~16% growth over the next year. Based on a lopsided mix of 46 Buys vs. 2 Holds, the analyst consensus rates the stock a Strong Buy. (See Amazon stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
