Amazon.com (Nasdaq: AMZN) is trading higher ahead of the
company's fourth quarter earnings report, expected out after the
market closes. Shares are up3.6% today.
AMZN is expected to report EPS of $0.88 on revs of $12.98 billion.
The Seattle, WA-based Internet retailer reported EPS of $0.51 on
revs of $7.56 billion, beating the consensus views on the top and
bottom. Looking back at Q410, we sees that Amazon produced
Shares gained 17% through the quarter, to $180.00 at the end of
December. Shares are down 1.8% since then, and finished 2010 about
A simple valuation puts Amazon at a forward P/E of 51x FY11 EPS
expectations, compared to 15.1x at eBay (Nasdaq: EBAY) and 54x for
Netflix (Nasdaq: NFLX).
Data from Bloomberg has 25 analysts with a Buy on AMZN, 13 with a
hold, and one suggesting to Sell. The analyst price target average
is $193, with a high of $225 and low of $163. Shares have traded in
a range of $191.60 - $105.8 over the last 52-weeks.
Amazon guided for Q410 sales of $12 - $13.3 billion and operating
income of $360 - $560 million.
- Goldman Sachs has a buy rating on the shares with a price
target of $200. They're looking for revs of $13.201 billion and
EPS of $1.10. They expect AMZN to report above their guidance,
given robust e-Commerce demand for the industry in general and
for Amazon, as their peak holiday 2010 order volume of 13.7
million grew 40% from Q409. Goldman thinks that they $654 million
operating income is achievable through the combination of "high
margin ebooks, Amazon Web Services, and third-party sales."
- Kaufman Bros. is looking for Amazon to beat revenue guidance,
but report a relatively in-line EPS. Revs will be driven by
strong e-Commerce and Kindle sales. EPS will come in-line on
higher fulfillment and marketing expenses. Therefore, they are
lookinng for revs of $13.4 billion and pro forma EPS of $1.17.
Kaufman is looking for North America sales to increase 53% in Q4,
a 700 basis point sequential gain. Support for the outlook
includes: 1) U.S. holiday eCommerce sales (Nov.-Dec.)
accelerating to 12% Y/Y, vs. 9% in the Jan.-Oct. period, per
comScore; 2) Amazon was the eCommerce leader with approximately
50% of online shoppers purchasing an item from Amazon, per
Compete (next two being eBay and Walmart.com at approximately 20%
each); and 3) 58% Y/Y growth in Amazon 4Q same-store sales, based
on ChannelAdvisor data." Conversely, International sales are
expected to increase 28%.
Kaufman has a Hold on the shares, with a price target of $163.
- Deutsche Bank has a Buy rating on the shares, with a price
target of $186. Growth will stem from Prime in international
markets, "and initiatives such as Kindle, Web Services and
Payments growing in importance." Unit sales should be strong,
offsetting tougher comps for the company.
- Janney is looking for revs of $13.2 billion and EPS of $1.13.
They see no sign of slowdown heading into FY11 "as Amazon is
poised to tackle the large CPG opportunity while 3P expansion
continues driven by FBA/Prime." They note that several
third-party sources have said that Amazon Marketplace has shown
growth in the 60% - 70% range though the holiday 2010 season.
Going forward, Janney is keeping an eye on: "1) IPTV
efforts/cost; 2) expect higher cash taxes in FY11 due to NOL burn
off; and 3) expect a slight impact as Target moves away from AMZN
services." They have a Buy on the shares, with a fair value
estimate of $219.
- Benchmark is also looking for a compression in margins
stemming from increased promotional spending, price competition,
and increased internal investment. They are looking for EPS of
$1.01 on revs of $13.5 billion. They note that, with Kindle
selling 8 million units in 2010, the device amounts to roughly 5%
of total Amazon.com sales.
Benchmark points out that eBay Gross Merchandise Volume (GMV)
increased 4% from Q409. U.S. GMV, excluding autos, increased 5%,
and International grew 6%.
The firm has a Buy rating and $210 price target on the
Investors will be paying attention to numbers for Amazon's
electronics and general merchandise businesses. Kindle numbers will
still be important, as Benchmark noted that they amount for about
5% of total sales for Amazon.
Updates for Diapers.com owner Quidsi acquisitions, as well as
guidance for the LoveFilm acquisition, will also be on investors
minds. No color was provided on the LoveFilm acquisition when news
started spreading last week.
Amazon.com is expected to release their Q111 earnings on Thursday,
January 27, 2011, at approximately 4:00pm EST. Stay tuned to
section to see our analysis of the highly-anticipated quarterly
results withi0 n seconds of their release.