Amazon.com, Inc. (NASDAQ:AMZN) is expected to report 1Q17 earnings on Thursday, April 27, after market close, with a conference call at 5:30pm ET. Maxim Group forecasts revenue to be slightly below the consensus estimate but above the midpoint of management's guidance range. It projects both adj. EBITDA and GAAP EPS to be above consensus.
On the call, the firm will be listening for details on management's strategy for physical retail locations to increase sales and market share; especially in the food/grocery and apparel categories. The firm is monitoring the increasing potential for lumpiness in the sales growth rates for Amazon Web Services, due to increased competition from Google and Microsoft and, to that end, will be listening for details on the call regarding the current competitive landscape. On the call, it will be listening for additional details on its advertising sales efforts, which could provide a short-term boost to revenues and margins as it expands the effort.
The firm anticipates 2Q17 guidance to reflect a continuation of significant investment spending across multiple initiatives, including Alexa, category expansion (groceries), content, international expansion (India), and physical stores. The firm is reiterating its Buy rating and increasing its 12-month target price to $1,000, from $940. Its new price target reflects its updated discounted cash flow analysis, which includes its new long-term adj. EBITDA margin forecast of 16.5% (vs. the firm’s prior 15.0% forecast) vs. 11.2% in 2016.