According to a research note published on Monday, Bank of America’s (BAC) Merrill Lynch reiterated a Buy rating on Amazon.com, Inc. (NASDAQ:AMZN) stock ahead of third quarter fiscal year 2016 (3QFY16) results. The sell-side research firm maintained a price objective of $960 on the stock. It is currently trading 1.32% at $829.79, as of 10:39 AM EDT.
Amazon is scheduled to disclose financial performance for 3QFY16 on coming Thursday. Most of the analysts, including Merrill Lynch expect upbeat earnings for the quarter given ongoing success of Amazon Web Services (AWS) along with all the traction Prime has gained. However, the 4QFY16 profit guidance is expected to be a little lower than expected.
Merrill Lynch analyst, Justin Post believes that the quarterly revenue for the company will be in-line or above the consensus expectations. The analyst projects AWS to grow by 11% on sequential basis and 53% year-over-year (YoY) in 3QFY16, compared to 12% and 58% in the last reported quarter.
The firm expect the company to guide for 4QFY16 revenues in-line with the consensus estimate of $44.50 billion, growing by 36% quarter-over-quarter (QoQ). As for 4Q operating profit, the firm believes that the company may guide conservatively due to decelerating AWS growth on tougher YoY comps, ongoing investments in Prime Video content, logistics build out, expanding AWS to new zones, and potential need for “cushion” given troubled fourth quarters in previous years. The firm expects profit guidance to be in $0.55-1.75 million range.
Most of the Street analysts are expecting a good future for Amazon investors. Out of 46 analysts who rated the stock, 13 recommend a Strong Buy, 26 advocate a Buy, five mark it a Hold, while only two believe it is a Sell. The consensus 12-month price target on the stock is $915.60, which shows an upside potential of 10.34% on the current trading price.