Amazon due for another record quarter: what to expect

Amazon’s AWS and e-commerce businesses both on track for double-digit growth

Amazon.com Inc. is expected to report another solid financial period when it reports third-quarter earnings after the market closes Thursday, fueled by stronger e-commerce sales and increased appetite for its cloud-computing service, Amazon Web Services.

Total Amazon AMZN, -0.26%  revenue is expected to rise by 29% year-over-year, with U.S. e-commerce sales increasing by 16% and AWS revenues rising by 52%, according to Cantor Fitzgerald, which recently raised its price target on Amazon shares to $1,000.

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“Our checks show healthy double-digit pace of growth in e-commerce and we view Amazon as one of the prime beneficiaries of such a trend,” Cantor Fitzgerald analyst Youssef Squali said in a note to clients Monday.

Here’s what to expect:

Earnings: Sell-side analysts surveyed by FactSet expect Amazon to report a profit of 78 cents a share, compared with 17 cents in the year-earlier period. Contributors to Estimize, a software platform that uses crowdsourcing from hedge-fund executives, brokerages and buy-side analysts to predict earnings, expect Amazon to report a dollar a share. The company topped both consensus estimates by a wide margin in the first two quarters of this fiscal year after missing Wall Street’s guidance by roughly 46% in the final quarter of fiscal 2015.

“After years of uneven profits, Amazon has begun to deliver substantial earnings,” said Wedbush analyst Michael Pachter, who has an outperform rating and $900 price target on the stock.

Revenue: The company is expected to report revenue of $32.689 billion, compared with $23.2 billion in the year-earlier period, according to the FactSet consensus estimate. Estimize has Amazon’s revenue coming in slightly lower, around $32.250 billion. Amazon beat both guidance ranges in its past two fiscal quarters.

See also: Louis Vuitton’s luxury goods are not available on Amazon – and that’s smart

Stock reaction: Shares of Amazon have outperformed the S&P 500 both in the past three months and the past year. The stock has risen nearly 12% in the three months since its last earnings report, compared with a decline of 1.1% for the index. They’re up 39% from a year ago, compared with a 3.6% increase for the S&P 500. On Monday, the stock traded 1.7% higher to $833.27. The average rating on the stock is the equivalent to buy, while the average price target on shares is $881.13.

What to watch for: Coupled together, Amazon’s ballooning e-commerce sales and cloud services have positioned the company for sustained and substantial earnings growth, said Pachter.

The company’s North American e-commerce same-store sales have started to turn around after several months of declines, rising 10.4% in August and 11.8% in September, compared with growth of just 6.4% in July, according to Nomura analyst Anthony DiClemente, citing ChannelAdvisor data.

“While below Amazon’s historical average, we believe the slower growth is substantially offset by ramping growth in total third-party sellers due to ongoing success of the Fulfillment by Amazon program,” said DiClemente, who rates Amazon shares a buy with a $950 price
target.

Alibaba’s stock has best-ever 2-day run after analysts ‘strong buy’ call

Shares of Alibaba Group Holding Ltd. shot up to a 1 1/2-year high in active trade Friday, after the China-based e-commerce giant was upgraded at Raymond James, which cited strong quarterly results and an attractive valuation.

Aaron Kessler, analyst at Raymond James, raised his rating to a strong buy, after maintaining an outperform rating since he began covering Alibaba nearly two years ago. Kessler raised his stock price target to $124, which is 26% above current levels, from $95.

Alibaba’s stock BABA, +7.06%  ran up 7.1% to close at its highest level since Jan. 28, 2015. It has advanced 12.5% since it reported fiscal first-quarter results before Wednesday’s open, the best two-day stretch for the stock since it went public on Sept. 19, 2014.

Volume was 71.7 million shares, nearly six times the full-day average of 12.5 million shares, according to FactSet, and enough to make them the most-actively traded on U.S. exchanges.

Don’t miss: Alibaba closes out a trifecta of e-commerce earnings beats

FactSet

Kessler offered several reasons for his more bullish view:

• Total retail revenue increased 49% to $3.52 billion, which was 6% above his estimates, because of strength in gross-merchandise volume growth and strong monetization gains.

• A big jump in monetization rates to 2.79%, in the latest quarter from 2.49% the previous quarter. The company showed improvements in both mobile, to 2.8% and desktop, to 2.78%.

“We would note this is the first quarter mobile monetization has exceeded desktop,” Kessler wrote in a note to clients.

• The cloud business is expected to continue to produce rapid growth—it nearly tripled in the latest quarter—and should remain the leader in China. Kessler said he believes cloud revenue is “well on track to reach a $1 billion run rate” by the end of the year.

• Strength in core margins, in which earnings before interest, taxes and amortization—a common measure of cash flow—grew 61% in the latest quarter.

• Shares are attractively valued, as 12 times calendar-year 2017 estimates of core-commerce earnings a share, compared with his expectations of 20% core long-term growth.

For Raymond James, stocks rated strong buy are expected to produce total annualized returns of at least 15%, and outperform the S&P 500 SPX, -0.08%  over the next six to 12 months. The S&P 500 has gained 6.8%, so far in 2016, as of midday Friday.

Kessler wasn’t alone in being more bullish on Alibaba. Of the 42 analysts surveyed by FactSet, three others raised their ratings, and 25 others lifted their stock price targets since Alibaba reported results.

By Tomi Gilmore

Source : http://www.marketwatch.com/story/alibabas-stock-takes-flight-after-analysts-strong-buy-call-2016-08-12

3 Big Stocks Everyone's Talking About -- and How to Trade Them

BALTIMORE (Stockpickr) -- Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generating investment ideas. Instead, let the crowd do it for you.
From hedge funds to individual investors, scores of market participants are turning to social media to figure out which stocks are worth watching. It's a concept that's known as "crowdsourcing," and it uses the masses to identify emerging trends in the market.
Must Read: Warren Buffett's Top 10 Stock Buys
Crowdsourcing has long been a popular tool for the advertising industry, but it also makes a lot of sense as an investment tool. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.
While some fund managers are already trying to leverage social media resources like Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for investors who want a starting point in their analysis.
Today, we'll leverage the power of the crowd to take a look at some of the most active stocks on the market today.
Must Read: 5 Toxic Stocks to Stay Away From



Amazon.com


Nearest Resistance: N/A¿
Nearest Support: $390¿
Catalyst: Q1 Earnings
E-commerce behemoth Amazon.com  (AMZN - Get Report) is up more than 14% on huge volume this afternoon, the end-result of strong first-quarter earnings numbers from the world's biggest online storefront. That's good enough to make Amazon the biggest single gainer on a percentage basis in the entire S&P 500. AMZN lost 12 cents per share last quarter, coming right in line with expectations, but the real pop is being driven by the double-digit top-line growth the firm achieved last quarter. That growth is continuing to accelerate, and management expects a small profit in the second quarter.
The news was good enough to send shares of AMZN to a new 52-week high. Making new highs is significant from an investor psychology standpoint because it means that everyone who has bought shares in the last year is sitting on gains. As a result, the "back to even" mentality is less of a concern than it would be for a name with a higher proportion of shareholders sitting on losses.
For traders who want to ride the bullish momentum, there's still time to build a position in AMZN now.
Must Read: 10 New Stocks Billionaire David Einhorn Loves



Pandora Media


Nearest Resistance: 19¿
Nearest Support: $17¿
Catalyst: Q1 Earnings
Internet radio stock Pandora Media  (P - Get Report) is seeing a big-volume move today, up about 2% this afternoon following the firm's first quarter numbers release. Pandora lost less money than expected during the quarter, shedding 12 cents per share versus average estimates of 17 cents.
While the reaction is pretty muted this afternoon, Pandora's chart looks solid. Shares have been in a downtrend for most of the last year, but this stock is finally showing signs of a turnaround, with a well-defined uptrend in play now. Shares touched trend line support at $17 at the open this morning, and they've been gaining steam over the course of the session. That makes now a good opportunity to be a buyer.
Must Read: 10 Stocks Carl Icahn Is Buying


Starbucks


Nearest Resistance: $52¿
Nearest Support: $48¿
Catalyst: Q2 Earnings
Last up on our list of high-volume movers is Starbucks  (SBUX - Get Report). This mega-cap coffee chain is up almost 5% in this afternoon's trading, boosted by second-quarter earnings results. Starbucks hit its earnings estimates dead-on, bringing in profits of 33 cent per share. The firm also reaffirmed its full-year earnings forecast of $1.55 to $1.57, a range that also fell in line with what Wall Street was looking for.
From a technical standpoint, SBUX has been in a textbook uptrend going back to October. Even with today's big bounce higher, shares remain squarely in that price channel right now. There isn't a lot of upside room between where SBUX sits now and $52 resistance. If you're looking for a buying opportunity, wait for a pullback to trend line support before jumping in

By Jonas Elmerraji 

Source: http://www.thestreet.com/story/13125999/1/3-big-stocks-everyones-talking-about--and-how-to-trade-them.html