E-commerce retail giant Amazon.com, Inc. (NASDAQ:AMZN) is scheduled to report first-quarter fiscal 2017 earnings results after the closing bell Thursday. With AMZN stock currently trading at near all-time highs, investors are betting that Amazon CEO Jeff Bezos, who continues to push the envelop on what is possible at the intersection of retail and tech, can deliver another breathtaking quarter.
AMZN stock closed Friday at $898.53, down 0.93%. As of this writing, the shares have risen 20.9% year-to-date, besting the 6% rise in the S&P 500 Index.
And those who bought Amazon stock on my recommendation on Sep. 29, when the shares closed at $829.05, have gained more than 11%. I issued another Buy recommendation on Jan. 18 that’s yielded as much as 14%. All told, betting against Amazon and AMZN stock continues to be a foolish game.
In that vein, I expect Amazon stock to reach $1,100 at some point in the next 12 to 18 months, yielding some 23% returns. And Amazon’s first-quarter results will be a major catalyst to that target. For the three months that ended March, analysts expect the Seattle, Washington-based company to earn $1.13 per share on revenue of $35.31 billion, translating to year-over-year growth of 5.6% and 21.2%, respectively.
For the full year, ending in December, earnings are projected to rise 47.7% YOY to $7.24 per share, while revenue of $165.26 billion would rise 21.5% YOY. Beyond the possible top- and bottom-line beat, however, AMZN stock will move based on the extent to which Amazon’s profit margins rise. Critics often complain about the company’s razor blade business model and aggressive spending, but Amazon’s Q4 EPS beat of 19 cents and the 54% rise on the bottom line showed how Bezos can mash the profit accelerator whenever he wants.
The performance of Amazon’s dominant cloud services business AWS (Amazon Web Services) cloud service will also be closely watched Thursday. Analyst will want confirmation that AWS can fend off emerging threats from rival services of Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc (NASDAQ:GOOG NASDAQ:GOOGL). In the fourth quarter, revenue from AWS surged 47% YOY to $3.54 billion.
AWS showed enough growth momentum, suggesting higher profits in the quarters ahead. And with the company working on things like drones, long-haul freight deliveries, fleet of airplanes and a host of other growth endeavors, Amazon continues to operate with the mentality of a startup with many growth catalysts to send AMZN stock higher.
Bottom Line for AMZN Stock
Jeff Bezos hasn’t always operated in the manner conventional wisdom would like, but his methods have gotten investors rich over the last five years as AMZN stock has soared 377% during that span. Accordingly, betting on Amazon stock is as much as placing on faith on Bezos’ ability steer Amazon in the right direction. And until Bezos loses his Midas-like qualities, I’m punching my ticket for AMZN stock to reach $1,100 in the next 12 to 18 months, yielding some 23% returns.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.
