Amazon.com Inc. (NASDAQ: AMZN) has confirmed that it will release its Q4 earnings report on Thursday, February 3, 2022, after market close.
What to look for
The company is likely to post record Q4 2021 revenue when it reports its earnings on Thursday, but profit is expected to drop from a year ago, attributed in part to high costs. When the company released its Q3 earnings, CEO Andy Jassy stated that the e-commerce retailer expected costs to increase by billions of dollars during the holiday quarter as the company faces supply-chain shortages, labor shortages, high shipping costs, and wages.
Earnings: Stockearning’s estimated EPS for the fourth quarter is around $3.88 per share. In the third quarter, the company reported a net income of $3.2 billion or $6.12 per diluted share, missing on estimates of $9.10 per share. Historical EPS performance shows that the company has, in the past 12 quarters, topped estimates eight times (66%) and missed four times (33%).
Revenue: The e-commerce giant expects quarterly revenue of $137.73 billion in the fourth quarter. In the third quarter, net sales were up 15% to $110.8 billion relative to $96.1 billion in Q3 2020.
Stock movement: AMZN shares have lost 16.5% since the company released its third-quarter earnings. Interestingly, AMZN shares have been DOWN 25 times out of the past 47 quarters. So, the historical price reaction suggests a 53% probability of the share price going DOWN once the company reports its fiscal Q4 2021 earnings. According to the Stockearning algorithm, the predicted first-day move is 6%, while the predicted move on the seventh day is 6%.
What analysts are saying
Credit Suisse analyst Stephen Ju slashed his price target on AMZN from $4,100 to $4,000 but maintained a Buy rating on the stock. In a research note, the analyst told investors that with the anticipated retention of seasonal fourth-quarter hiring into this year, he thinks the e-commerce giant is a step closer to witnessing an enhanced proliferation of quick delivery at the end of two years of capacity constraints.
BMO Capital analysts Daniel Salmon also slashed his price target on AMZN from $4,100 to $3,600 but maintained a Buy rating in the stock. The analyst is also lowering his FY22 EPS forecast from $65.04 to $42.99 to reflect his anticipations for lower digital store and third-party vendor revenues in 2022 and 2023 as a result of continuing supply chain constraints both locally and internationally, as well as lower profits in 2022 and 2023 to accurately represent continual investments in the fulfillment network, and to accurately reflect tough comps. On the other hand, Salmon believes that AWS will see high demand following COVID-19 and that Amazon will continue to spearhead the rise of "Retail Media."
Mizuho analyst James Lee lowered his fiscal 2022 EBITDA projection by 6% but maintained a Buy rating and price target of $3,950. The analyst’s advertising call indicated that daily advert spending growth per advertiser decelerated YoY in Q4 by 32 points to 10% because of tough comps from last year's Prime Day and supply chain headwinds, increased logistics costs, and growing inventory and labor costs. Lee sees the Q1 consensus estimates as aggressive and has an operating income projection of 10% below consensus. The analyst expects headwinds to ease in2H 2022 since most incremental costs are short-term.
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