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July 25, 2019, 3:23 p.m. EDT

Amazon earnings: Top-line growth is in focus for the second half of the year

Amazon Prime one-day shipping is expected to drive sales

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By Tonya Garcia, MarketWatch


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Amazon has had record profits, and now JPMorgan thinks revenue will grow

Fresh off of Prime Day, Amazon.com Inc. is scheduled to report second-quarter earnings after the closing bell on Thursday and JPMorgan analysts think it’s time to shift focus to revenue after a string of quarters with blockbuster profit.

“We believe the key driver of Amazon’s share price over the past ~12-to-18 months has been its significant profit outperformance (+300 basis points operating income margin expansion in 2018 with ~$1 billion-plus profit beats in four of the last five quarters), which has outweighed revenue deceleration concerns and ongoing regulatory and antitrust scrutiny,” wrote JPMorgan in a July note.

Amazon’s /zigman2/quotes/210331248/composite AMZN +0.03%   first-quarter earnings marked the fourth consecutive quarter that the e-commerce giant reported record profits.

“Looking forward, we expect the Amazon narrative to shift back more toward top-line growth in the second half of 2019, which in our view is important as Amazon remains a growth story and it’s too early for the company to be in harvest mode,” JPMorgan said.

Read: It’s Amazon’s Prime Day but other big retailers also benefit

Analysts led by Doug Anmuth think one-day shipping could drive revenue acceleration though they would be “surprised” at any “significant” profit beat given the cost of cutting the Prime shipping time down from two days.

Amazon said it would spend $800 million in the second quarter to cut the Prime shipping time in half.

JPMorgan rates Amazon stock overweight with a $2,200 price target. Amazon is one of the group’s top picks, and occupies a space on its U.S. Analyst Focus List.

See: Amazon Prime Day sales surpass Black Friday and Cyber Monday combined

Amazon has an average buy stock rating and average target price of $2,254.38, according to 47 analysts polled by FactSet.

Here’s what else to expect from Amazon’s earnings:

Earnings: FactSet expects Amazon to report earnings per share of $5.56, up from $5.07 last year.

Amazon has beaten FactSet EPS expectations for the last seven quarters.

Estimize, which crowdsources estimates from analysts, fund managers and academics, expects EPS of $6.05.

Revenue: Amazon is expected to report revenue of $62.52 billion, according to FactSet, up from $52.89 billion last year.

/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 1,760.94
+0.61 +0.03%
Volume: 2.75M
Dec. 13, 2019 4:00p
P/E Ratio
77.96
Dividend Yield
N/A
Market Cap
$872.77 billion
Rev. per Employee
$359,671
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