Investors are gearing up to receive the latest potential financial bonanza from tech-titan Amazon.com Inc (NASDAQ:AMZN) as it posts fourth quarter results, which will cover the key holiday period.
The question is will the numbers, set for release after the bell, impress or disappoint - or both?
Strong growth..
Amazon has reported a strong period of growth in the last couple of years, driven largely by its Amazon Web Services business.
In the September quarter it completed the Whole Foods acquisition and announced a few new developments in the AWS business and the consumer business.
Current growth is expected to come from existing businesses, including core e-commerce as well as the web services side.
Consensus is for fourth quarter revenue to come in at US$1.84 EPS (earnings per share) and revenue of US$59.81bn.
Michael Pachter at broker Wedbush said: "We expect Q4 upside driven by very strong holiday demand, a full quarter of Whole Foods contribution, and continued growth in high margin segments."
He forecasts revenue for the three months at US$59.27bn against consensus and the firm's own guidance of US$56 to US$60.5bn, reflecting a better-than-expected holiday season, US$4.4bn from the topline contribution from Whole Foods and "continued positive momentum for third-party seller services, subscriptions, and AWS".
Earnings over long term..
Summing up the broker view, Pachter said: "Amazon can deliver substantial earnings over the long term by growing spending more slowly than revenues.
"Amazon Web Services (AWS), fulfilment by Amazon (FBA), and ads should drive steady margin growth, with Prime driving overall retail revenue growth.
"Margin expansion will likely be tempered somewhat by increased spending, while nonetheless leaving significant room for earnings growth."
Wedbush rates the shares 'outperform' and targets US$1,285 for the shares.
Elsewhere, Canaccord Genuity has a 'buy' rating and $1,500 price target.
"We think Q4 will be another impressive holiday quarter for Amazon, and believe the recent focus on hardware launches may intensify further Amazon.com purchase activity," says the broker.
Investors should expect international expansion and increased Prime benefits to drive membership despite tougher subscription services comps, according to Canaccord.
Amazon shares are down 0.82% to US$1,483.93 at the time of writing.