Here’s what Wall Street is saying about Amazon ahead of earnings

Amazon (AMZN) is scheduled to report results for its third quarter of 2024 after the market close on Thursday, October 31, with a conference call scheduled for 5:00 pm ET. Here’s what to watch for:

EXPECTATIONS: During the company’s last earnings call, Amazon said it saw Q3 revenue in the range of $154B-$158.5B, or to grow between 8% and 11% compared with third quarter 2023. This guidance anticipates an unfavorable impact of approximately 90 basis points from foreign exchange rates. Operating income is expected to be between $11.5B and $15.0B, compared with $11.2B in third quarter 2023. “This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded,” the company stated.

Current consensus EPS and revenue forecasts for Amazon’s third quarter stand at $1.14 and $157.2B, respectively, according to data from Yahoo Finance. The consensus EPS and revenue forecasts for Amazon’s full year 2024 stand at $4.73 and $635.36B, respectively.

HEADWINDS PRICED IN: On Monday, UBS raised the firm’s price target on Amazon.com to $223 from $220, keeping a Buy rating on the shares ahead of the October 31 earnings report. The firm thinks the prospects for near-term margin headwinds due to content, Project Kuiper, and other investments are already priced in.

CONTINUED RAPID GROWTH: Pivotal Research initiated coverage of Amazon.com with a Buy rating and $260 price target earlier this month. Amazon has a “deep moat” around its core businesses driven by “unmatched scale” and has what appears to be the largest organic revenue growth opportunity of any mega cap tech company, driven by the Web Services segment, the firm tells investors in a research note. Pivotal Research sees “continued rapid growth” in the company’s advertising business. Amazon also has the highest potential of its peers to materially boost operating margins driven by scale, leveraging robotics and benefits from an increasing percent of revenue from high margin cloud computing, contends the firm.

Just a day prior, Scotiabank had also started coverage of Amazon.com with an Outperform rating and $245 price target The firm has a high level of confidence that consumers will use Amazon’s services more in the future. It is also positive on the company’s ability to monetize its artificial intelligence investments. Scotiabank expects corporate uses, streamlining customer interactions, speeding code development, storing and contextualizing unstructured data, and other business efficiencies to be the most substantial near- to medium-term opportunities.

MULTIPLE HEADWINDS: On October 7, Wells Fargo downgraded Amazon.com to Equal Weight from Overweight with a price target of $183, down from $225. The firm says Amazon’s “positive estimate revision story faces multiple headwinds.” Web Services strength alone is “not enough” and there is limited visibility into a resumption of positive estimate revisions until the July 2025 guidance, Wells tells investors in a research note. The firm believes that while Amazon has been a consistent positive revision story, there are factors pressuring this in the near-term from Project Kuiper investment and moderating advertising contributions.

AWS CLOUD GROWTH: BMO Capital keeps an Outperform rating and $230 price target on Amazon.com while raising the firm’s Q3 AWS Cloud growth to 20% from 19%. BMO is also raising its FY24 EPS view on Amazon by 4c to $4.53 and its FY25 view by 3c to $5.30. The firm sees acceleration potential ahead for the company given the optimization normalization in the second half of 2024 and continued Bedrock adoption, though it also warns that the consumer trade-down effect remains the largest variable in the second half of the year, with mixed checks that include a solid back-to-school spend being offset by slowing beauty/electronics/home.

KINDLE VELLA, AMAZON TODAY: Amazon plans to shut down its Kindle Vella serialized story platform in February 2025, the company announced. Amazon said: “This was a difficult decision. We are grateful for all of the authors and readers who participated in Kindle Vella and, while we remain committed to experimenting and testing new ideas to deliver unique and delightful experiences for both readers and authors, Kindle Vella hasn’t caught on as we’d hoped. All the stories and episodes you have read or unlocked with tokens will remain available in your library in the free Kindle app on iOS and Android after the program closes.”

Meanwhile, CNBC reported that Amazon is shuttering its Amazon Today same-day delivery service, which offers rapid delivery of items from mall and brick-and-mortal retailers. The company has ceased any new development of the service and intends to start winding it down, CNBC’s Annie Palmer says, citing two people with knowledge of the matter. The bulk of Amazon Today will be closed down by December 2, the author notes.

SENTIMENT: Check out recent Media Buzz Sentiment on Amazon as measured by TipRanks.