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By Brendan Gilmartin, VP Research & Content

Amazon.com (NASDAQ:AMZN) is scheduled to report Q1 2013 earnings after the closing bell on Thursday, April 25. Results are typically released between 4:01 p.m. and 4:10 p.m. ET. A conference call will follow at 5:00 p.m.

Outliers and Strategy

Amazon provided the following guidance for the Q1 2013 period in its January (Q4) earnings release:

  • Net sales are expected to be $15.0 billion and $16.6 billion, or to grow between 14% and 26% compared with first-quarter 2012. The current consensus is toward the high end of this range at $16.16 billion (source: Yahoo Finance). Revenue is a critical measure for Amazon and often dictates the after-hours trading action, given the wide breadth of analyst and company estimates.
  • Operating income (loss) is expected to be between a loss of -$285 million and $65 million, compared with $192 million in the prior-year period.

Amazon is expected to post earnings of $0.09 per share (range is -$0.29 to $0.38), down from $0.28 in the prior year (source: Yahoo Finance). Forward guidance is a critical measure for Amazon and usually impacts the ensuing trading activity. Current estimates (Q2 2013) for revenues are $15.94 billion. If the low end of revenue forecast exceeds this estimate, shares could rally to new all-time highs. While much of the attention centers on Amazon's retail operations, an overlooked part of its business are the hosted web services and cloud-computing segments that are contributing meaningful revenue.

Recent News

  • April 24: According to a post on Bloomberg.com, Amazon is planning to launch a set-top box for streaming video. The TV-enabled device would reportedly enable users to access Amazon's Video on Demand store.
  • April 17: Nomura Securities raised its price target on Amazon.com from $300 to $315 ahead of the Q1 2013 earnings release, according to a post on StreetInsider.com. The firm cited higher revenue and gross margins. The firm rates Amazon a Buy.
  • March 14: According to a post on Benzinga.com, JPMorgan downgraded Amazon.com from Overweight to Neutral and reduced the price target from $333 to $300. The firm cited several factors, including slower profit growth in 2013, and tougher year-over-year comps.

Technical Review

Amazon recently broke out to an all-time high of $284.72 on the heels of its previous earnings release, but has since made a series of lower highs -- possible signs that the momentum is fading. Should earnings disappoint, Amazon could easily retest the recent support near $255, with downside risk to the 200-day SMA near $250. In past releases, however, an initial sell-off is typically accompanied by a rebound higher. Initial resistance in this case would be the $275 area.

Click to enlarge image.

Summary

Amazon shares are within earshot of the all-time highs established in late January on evidence of an improved spending backdrop, an increasingly dominant position in e-commerce, a pickup in the global economy, and a strategic push into mobile. Against this positive backdrop, Amazon is vulnerable to any missteps. Note that in past releases, the tendency has been for shares to sell off sharply on the initial report only to rally in the ensuing session.

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Source: Amazon.com Near Recent All-Time Highs Ahead Of Q1 Earnings