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FINANCIALS

Amazon.com, Inc (NASDAQ:AMZN) Posted A Beat And Raise For Q1; PT Raised At RBC And Jefferies

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The quarter could serve as an inflection point for Amazon’s profitability says Mahaney

Amazon.com, Inc. (NASDAQ:AMZN) beat estimates comprehensively on all accounts with its recently posted Q1 results. The company also raised the guidance for Q2 and showed strong growth in almost all areas.

The Q1 earnings report provided revenue of $29.1 billion which was ahead of consensus estimate of $27.97 billion by more than a billion dollars. The EPS came in at $1.07 coming in at almost double the consensus estimate of $0.58 with a surprise of 49 cents. The revenue growth was 29% excluding forex impact.

Mark Mahaney, analyst at RBC Capital sees the quarter as an inflection point for Amazon and expects trends to go upwards from here on. The primary factors behind the beat are largely Global and North American retail business growth. Amazon Web Services also played its part in the beat phenomenon but only to a limited extent. The EPS beat is largely because of record high gross margins of 35.2% and an eight year high operating margin of 3.7%. The guidance for the next quarter was well above the Street’s estimates and trends are likely to get better. Robust revenue trends with 27% and 26% growth in North American and International retail business are likely to be key drivers of growth. The analyst raised his PT to $800 from $715 and reaffirmed an Outperform rating on the stock.

The Internet stocks team of Jefferies sees Amazon Prime flywheel strategy as largely successful as they raised the PT to $865 from $775 following the Q1 earnings call. The acceleration in growth in all fronts was a large positive and is likely to continue over the next quarter. Amazon is currently undergoing a period of expansion as the spending is likely to remain high. The team remained positive on the stock as it remains the top pick among the covered tickers. The FY2016 EPS estimate is now $5.07 from $4.63, while, for 2017 it is $10.68 from $9.39.

The analyst opinion for AMZN has 12 strong Buy, 28 Buy, and five Hold recommendations as the stock is now traded at $665 soaring upwards from $660 in seconds after the open of the market.

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