Can Amazon Recover Recent Losses With Next Week’s Q3 Results?
Spreadex | Oct 17, 2018 11:59
Up until October the online retail giant was having a pretty flawless 2018. Opening at $1179.08, it had surged to a record peak of $2050.58 by the start of September, a truly incredible climb that is all the more astonishing when you zoom out and look at the sheer consistency of its market performance over the last few years.
Since that high, however, it has hit a rocky patch. The stock wasn’t immune to the wider market problems that plagued early October, at one point briefly dragging it below $1700. Amazon.com Inc (NASDAQ:AMZN) now sits at a current trading price of $1848 (Spreadex, 17/10/2018), a near 57% increase from where it began the year.
The firm’s second quarter results back at the end of July adequately capture why it has been on such a remarkable run. While revenue was around half a billion lower than forecast, rising 39% to $52.9 billion, the disappointment at such a miss was nothing compared to the awe inspired by the fact its quarterly net income was more than double what analysts had forecast, jumping from $197 million (or 40 cents per diluted share) to a record $2.53 billion (or $5.07) year-on-year. As for the much-watched Amazon Web Services division, revenue rose nearly 50% to $6.1 billion.
In terms of the third quarter results next Thursday, net sales are expected to rise between 23% and 31% year-on-year to $54 billion to $57.5 billion, with operating income somewhere between $1.4 billion and $2.4 billion against the $347 million posted in Q3 2017. An update on the cost of its recently announced wage increase will also be welcome.
Amazon.com Inc has a consensus rating of ‘Buy’ alongside an average target price of $2014.49.
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