Amazon Reports Earnings Thursday. They Should Be Really, Really Good.

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Updated July 29, 2021 6:45 americium ET / Original July 28, 2021 2:39 p.m. ET

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Amazon has bushed expectations for 10 quarters successful a row. Here, Amazon office successful Torrazza Piemonte adjacent Turin, Italy.

Stefano Guidi/Getty Images

Amazon reports net aft Thursday’s closing bell. Expect a blowout.

For the June quarter, the tech elephantine has projected sales of $110 cardinal to $116 billion, with operating income successful the $4.5 billion-to-$8 cardinal range. Wall Street statement calls for income of $115.4 billion, operating income of $7.8 billion, and net of $12.28 a share.

There are respective reasons wherefore the Street numbers mightiness beryllium excessively low. 

For one, Amazon (ticker: AMZN) has bushed expectations successful each 4th since the commencement of the pandemic—in fact, for 10 quarters successful a row.

Another is that Amazon’s competitors person already reported coagulated numbers. Shopify (SHOP), arguably 1 of the company’s astir important rivals successful e-commerce, posted better-than-expected results for the June quarter, noting that sustained integer commerce trends and U.S. stimulus checks successful March and April drove revenues supra expectations. Strong reports from Alphabet, Snap and Twitter suggest Amazon volition station accelerating maturation successful its underappreciated advertizing business. And the strength successful the unreality concern astatine Microsoft bodes good for Amazon Web Services.

Street estimates telephone for Amazon to station $57.3 cardinal successful online sales, up 25%; $24.8 cardinal successful third-party sellers services, up 36%; $14.3 cardinal from AWS, up 32%; $7.9 cardinal successful subscription services, up 36%; $7 cardinal successful “other” revenue, which is mostly advertising, up 66%; and $3.9 cardinal successful carnal stores revenue, up 3%.

Plus, determination are a mates of different factors astatine play. This volition beryllium the archetypal 4th for Amazon since Jeff Bezos turned implicit the CEO reins to Andy Jassy. Bezos didn’t typically enactment successful the company’s quarterly net calls with analysts, leaving that occupation to CFO Brian OIsavky; it remains to beryllium seen if Jassy volition marque an quality this year. Also, Amazon finds itself astatine the bosom of the debate—in Washington and elsewhere—over the powerfulness of tech companies, and present faces an in-depth probe by the Federal Trade Commission implicit its projected acquisition of the movie workplace MGM. Amazon has requested that FTC Chair Lina Khan recuse herself from immoderate matters involving Amazon fixed her past criticisms of the company.

Investors besides volition beryllium watching for clues connected however the institution expects the pandemic and a instrumentality to a much mean system volition interaction results for the remainder of the year. Street estimates for the September 4th telephone for gross of $118.6 cardinal and profits of $12.97 a share.

In a probe note, MKM Partners expert Rohit Kulkarni points retired that Amazon has underperformed some Alphabet and Facebook shares this year. He thinks the banal has been weighed down by ongoing statement astir the existent spot of this year’s Prime Day income event, arsenic good arsenic ongoing questions astir the outlook for e-commerce arsenic supplemental U.S. unemployment benefits lapse successful September. Nonetheless, Kulkarni thinks that advertising, Amazon Prime subscriptions, and AWS volition unneurotic thrust upside to some second-quarter results and guidance, and helium continues to see Amazon his champion prime among the large net stocks. Kulkarni keeps his Buy standing and $4,075 people price.

Evercore ISI expert Mark Mahaney maintains an Outperform standing and $4,500 people price. He thinks Street estimates for the 2nd 4th “look mostly reasonable,” though helium has immoderate concerns that the Street mightiness beryllium excessively bullish connected the 3rd quarter, successful peculiar fixed Prime Day this twelvemonth shifted into the 2nd quarter. 

Monness Crespi White expert Brian White notes that Amazon shares person been “range bound” implicit the past fewer months, but helium thinks the institution is “uniquely positioned” to exit the pandemic arsenic 1 of the biggest beneficiaries of the integer translation trend. White asserts that “the company’s maturation way is precise charismatic crossed the e-commerce segment, AWS, integer media, advertising, Alexa and more.” White maintains his Buy standing and $4,500 people price.

Amazon shares were small changed astatine $3,630. successful premarket trading Thursday.

Write to Eric J. Savitz astatine eric.savitz@barrons.com

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