Analysts are sharpening up their models in advance of Amazon.com‘s (AMZN) Q4 report tonight.
Shares of Amazon are down 27 cents at $191.88.
The consensus for tonight is for $18.26 billion in revenue and 17 cents EPS. The outlook for the current quarter is for $13.4 billion and 32 cents.
The range of Q4 estimates especially wide this time around, with the high estimate on the Street being 43 cents, and the lowest estimate being a loss per share of 26 cents. That’s a reflection of the fact that the forecast offered back in October by Amazon management was “wide enough to drive a truck through,” as one analyst put it, with the company projecting $16.45 billion to $18.65 billion in revenue.
Street is of course looking for any color on the company’s first quarter of sales of the “Kindle Fire” tablet computer. (Though knowing Amazon’s history of not giving out such, it’s unlikely they’ll get much.) Also, there’s some hope expressed by many, though not all, that this might be the quarter the deterioration in margins. And, hey, who knows, maybe even some small hint of that smartphone that Citigroup was expecting may come out by the end of this year.
Jeetil Patel, Deutsche Bank: Reiterates a Buy rating and a $246 price target. He’s looking for $17.98 billion in revenue and 42 cents in per-share profit. Profit growth is “pressured” by investments, but will resume in the latter half of this year, he thinks. “We expect 4Q unit growth of 43% YoY, which has potential upside, while Kindle Fire unit sales could help the top-line. Given the robust growth, we would not be surprised to see the company continue to build out additional fulfillment centers (FCs) to support growth, especially to move toward same-day delivery in states like CA, NY.”
Scott Tilghman, Caris & Co.: Reiterates an “Above Average” rating and a $250 price target. He’s modeling $18.1 billion in revenue and 40 cents EPS. Tilghman thinks there will be some relief from worries about spending — at some point.� “Ultimately we believe Amazon needs to signal an easing of investment costs, somewhat regardless of 4Q results, in order for shares to move higher [...] Overall, we expect operating margins to fall to 1.2%-the lowest level in a decade. However, we expect 1Q guidance to highlight early easing in the significant Y/Y margin declines experienced during 2011. Specifically, we expect marketing costs to ease and a slowdown in fulfillment additions and thus lower incremental costs, but margins still down Y/Y.”
Doug Anmuth, JP Morgan: Reiterates an Overweight rating and a $235 price target. He’s modeling $18.3 billion in revenue, based on sales of 5 million Kindle Fire units. He’s betting the outlook for this quarter shows a turnaround in margins. “We believe 4Q11 could be the low point for margins as: 1) Kindle Fire device losses moderate as fewer devices are sold in 1Q12; 2) Amazon Prime Video and Kindle Lending library�s costs should grow more slowly as a run-rate for these investments has been established in 4Q; 3) greater Prime adoption and Kindle-Fire related ebook and physical sales should create positive leverage in 2012�we conservatively estimate $1B in Fire-related retail sales this year.”
Colin Gillis, BGC Partners: Reiterates a Sell rating. He’s modeling $17.9 billion last quarter and just 5 cents EPS. The company continues to see profit hurt by its ongoing investments, especially selling the Kindle “for no profit.” “The company is facing more difficult growth comparisons in 2012 given the positive trends for e-commerce in 2011. Given its high price-earnings multiple, which at 183x our 2011 estimate is over five times that of any other company in our coverage (which has a median multiple of 15x 2011 earnings), if investors stop awarding Amazon a premium, the company could face lengthy downward or sideways share price action. Amazon is neither the fastest growing, or most profitable, company in our coverage.”
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