Amazon Q3 Earnings Preview: Keep An Eye On AWS

Amazon.com, Inc. AMZN is expected to report third-quarter earnings Thursday. Analyst estimates call for earnings of $3.12 per share on sales of $57.1 billion.

Higher Minimum Wage 'Squarely In Focus'

Amazon’s growth in advertising, Amazon Web Services and third-party sales will be focal points of the report, D.A. Davidson analyst Tom Forte said in a preview note. (See his track record here.)

The analyst expects 27.4-percent sales growth, amounting to $55.74 billion, as sales have topped the consensus forecast in 11 of the past 14 quarters.

Forte anticipates a GAAP operating income of $2.1 billion, as well as an earnings per share of $3.38.

Amazon Web Services sales should increase by 44 percent, he said.

Investors will likely pay close attention to Amazon's new $15 minimum wage, Forte said.

“While we see it as an increasingly necessary move for Amazon to attract talent, expand its physical footprint, and make a statement, the financial impact will be squarely in focus this quarter.”

Forte reiterated a Buy rating on Amazon with a $2,450 price target

Market Research

Amazon’s worldwide e-commerce revenue is expected to increase by more than 28 percent this year to reach $394.23 billion, according to eMarketer data. The company’s domestic e-commerce revenue should grow over 29 percent to $258.22 billion.

Amazon's global net digital ad revenue is expected to surge 143 percent to reach $5.83 billion, giving Amazon a 2.1-percent share of the market on a global scale, eMarketer said.

Other notable statistics from the research include:

• Worldwide mobile ad revenue growth of 235 percent.
• 88.7 million U.S. viewers of Amazon Prime Video.
• 40.7 million U.S. Amazon Echo owners.

Amazon's stock traded around $1,737.94 Wednesday afternoon. Shares are up 46 percent year-to-date.

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