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Earnings Outlook: Amazon earnings preview: Prime Day could return to summer after COVID-19 pushed it to fall last year

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Amazon.com Inc. is scheduled to report its first-quarter earnings on Thursday after the closing bell, but analysts are already looking ahead to the possible summertime return of the colossal Prime Day shopping event.

Last year, Amazon
AMZN,
+2.31%

pushed Prime Day back to October 13 and October 14 due to the disruption of the shopping calendar from COVID-19.

“Prime Day remains a wild card, with rumors first suggesting a possible June shift before more purported leaks on Friday pointed to a normal July time frame,” wrote Benchmark’s Daniel Kurnos in a note.

Analysts are confident that the accelerated shift to e-commerce, which has already benefited Amazon, continued into the first quarter. But experts are turning an eye toward the rest of 2021, when the vaccine rollout and the slow return to normal life could once again shift spending.

Read: Expect ‘eye popping’ sales numbers from consumer companies as calendar laps COVID closures

“While we continue to hear about inconsistent consumer data points heading into 2Q, we believe a combination of stimulus money, learned e-commerce behaviors and advertising strength should more than offset the expected impact of reopening, which we suspect will be less than anticipated regardless,” Benchmark said.

“Assuming Prime Day returns to its normal July slot, Amazon will be faced with a pandemic-driven 40% growth rate comparison — a 14-point higher hurdle than 1Q.”

Benchmark rates Amazon stock buy with a $4,400 price target.

Sales metrics have been thrown out of whack for many retailers as consumers were living under pandemic lockdowns for much of 2020.

Moreover, a great deal of spending was on “stuff,” from groceries to home goods to items that would help pass the time, much of which can be purchased on Amazon.

Also: America is set to reopen on July 4 and restaurants are poised to benefit from a desire to ‘get out and gather,’ says JPMorgan

Now, consumers are beginning to spend on “experiences” again, like dining out and sporting events, and there is concern over how that change might impact a variety of retailers that either experienced soaring sales during COVID-19 or saw sales come to a virtual standstill.

“For the first time in several years, we think that Amazon’s guidance will be close
to the mark, and we are modeling only modestly higher revenue and operating
profits than the high end of company guidance,” Wedbush analysts wrote.

Wedbush rates Amazon stock outperform with a $4,000 price target.

Amazon guided for first-quarter sales of $100 billion to $106 billion. By October 2020, Amazon had already recorded its most profitable year.

The company also announced during its fourth-quarter earnings report that Jeff Bezos will step down as chief executive in Q3 2021 and Amazon Web Services head Andy Jassy will succeed him. Bezos will remain as executive chairman of the company.

And: Jeff Bezos’s successor as Amazon CEO, Andy Jassy, wins thumbs-up from analysts

Amazon has an average buy stock rating, according to 50 analysts polled by FactSet, with an average price target of $4,027.74.

Here’s what else to what for when Amazon reports its earnings:

Earnings: The FactSet consensus is for earnings per share of $9.54, up from $5.01 last year.

Estimize, which crowdsources estimates from sell-side and buy-side analysts, hedge-fund managers, executives, academics and others, is forecasting EPS of $11.16.

Amazon has beaten the FactSet EPS consensus the last three quarters.

Revenue: The FactSet consensus is for revenue of $104.50 billion, up from $75.45 billion last year.

The Estimize forecast is for revenue of $107.39 billion.

Amazon has beat the FactSet revenue forecast the last nine quarters.

Stock price: Amazon shares have gained 5% for the year date, and are up 41.7% over the last year.

The Amplify Online Retail ETF
IBUY,
+0.43%

is up 11.1% for 2021 so far. And the S&P 500 index
SPX,
+0.31%

is up 11.6% for the period.

See: As Bezos seeks to be ‘Earth’s best employer,’ Amazon fights shareholder calls to prove its progress

And: Bezos’ swan song letter vows an ‘obsession’ with employee welfare

Other items:

-Amazon stands to make big gains from the shift to online grocery. Overall online grocery sales reached $95.8 billion in 2020, and are expected to reach $112.9 billion in 2021, according to eMarketer data.

“We think that SIP [shelter-in-place] accelerated the growth of Amazon Fresh and we expect customers won during the pandemic to remain customers,” Wedbush analysts said. Amazon is also the parent company to Whole Foods Market.

Wedbush estimates that the U.S. grocery market opportunity is $800 billion.

“Although it is unlikely that Amazon will grow this share by more than 1% or so per year, the opportunity is substantial and even 1% market share gain reflects over a 2% lift in overall sales.”

-Amazon’s other businesses provide a cushion during the recovery. “The shape of the recovery here in the U.S. and abroad will largely determine the pace of deceleration in the retail business,” Stifel analysts wrote.

Amazon’s 200 million Prime members are working in the e-commerce giant’s favor, but there are other benefits.

“As an offset Amazon’s fastest-growing and higher-margin businesses, AWS and marketing, are both well positioned in a recovery and may support stronger margins through the current investment cycle,” Stifel analysts wrote.

Stifel rates Amazon stock buy with a $4,000 price target.

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