Goldman Sachs Lifts Amazon Target From $920 To $1,050 Ahead Of Q3 Results

Goldman Sachs’ Heath P. Terry expects Amazon.com, Inc. (NASDAQ: AMZN) to post its revenue marginally ahead of consensus when the company reports its Q3 results on Thursday.

Terry maintained a Buy rating on the company, while raising the price target from $920 to $1,050.

The analyst expects Amazon to report Q3 revenue of about $33 billion, ahead of the consensus forecast of $32.7 billion, driven by a slight acceleration in AWS, which mitigated the deceleration in ecommerce.

The adjusted operating income is expected at $1.42 billion, suggesting margins of 4.3 percent and growth of 39 bps year-on-year.

Related Link: Alphabet And Amazon Join The $1,000 Price Target Club At Credit Suisse

Favorable Risk/Reward

Terry believes the risk/reward on the stock continues to be favorable, “as investments in web services, infrastructure, and logistics result in share gains, cash flow growth, and continued high returns on investment.”

The analyst believes that the rapid pace at which workloads are being migrated to the cloud, as well as the investments in AWS capacity during 2016 could drive acceleration in growth in H2 2016.

Guidance

Following the deceleration in FX-neutral retail revenue growth over the past five years at an average of 462 bps from Q3 to Q4, Terry expects Amazon to guide to revenue of $43-$46 billion for Q4, with CAAP operating profits of $1-$2 billion, as growth accelerates at AWS and “expenses reflect the opening of new fulfillment centers and AWS availability zones.”

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