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Amazon.com, Inc. (NASDAQ:AMZN) Had a Blowout Third Quarter: Analysts

Amazon.com, Inc. is all set to release Q3 numbers after the close of trade on Thursday. Analysts expect strong y-o-y revenue growth of 21% to $24.9B. Earnings per share should come in at minus 12 cents.

The online retail giant has far outperformed its peers. Shares are up more than 80% this year. That compares to a meager 9% rise among the top 10 tech firms. Since last quarter, the stock is up almost 20%. And expectations are sky high going into result day.

Amazon.com (NASDAQ:AMZN)

Amazon Web Service is the Growth Engine

Analyst optimism is primarily based on growing Amazon Web Services adoption.

Bank of America ML is projecting the unit to record a robust y-o-y growth rate of 78% on $2.08B in sales. Analyst Justin Post says AWS Q3 margins should be around 22%. Add to that the absence of any pricing pressure, which should ensure continuing strength.

The AWS re:invent meet held earlier this month saw Amazon unveiling a slew of new products. Most analysts were impressed.

“We are confident that the AWS segment will be a significant contributor to Amazon’s profitability going forward,” Nomura’s Robert Drbul wrote.

Another key growth driver should be the Amazon Prime traction.

Amazon.com, Inc. ‘s Prime Day on July 15 resulted in the addition of a record number of Prime members. Sales also beat Amazon’s biggest Black Friday.

“We estimate contribution of at least $1.2B in incremental sales in a single day,” Wedbush analyst Michael Pachter said.  Pachter also expects Amazon to report total revenue of $25.5B. That’s higher than the consensus Wall Street forecast.

Mizuho analyst Neil Doshi is also banking on Amazon.com, Inc. topping consensus revenue estimate. But he thinks Prime Day was a “mixed” success. “Sales surpassed the company’s biggest Black Friday on record. But consumers were disappointed on deals.”

Watch Out for the Conference Call

Jeff Bezos has continued with his aggressive foray into new markets with exciting products. Analysts will be closely watching the post-earnings conference call for any fresh clues on his future projects.

Baird Equity’s Colin Sebastian believes Bezos is eyeing the global logistics business. With up to $450B in market opportunity, Amazon.com, Inc. already has an edge with its existing distribution network, he said.

“Amazon has powerhouse potential in the large transport and logistics market,” Sebastian noted. The sector is currently led by global majors such as DHL and UPS .

Piper Jaffray’s Gene Munster reckons “there are several currently identifiable categories that could provide opportunity.”

He goes on to add that Amazon’s focus on expansion is a “reason for long-term optimism.”

Shares of Amazon.com, Inc. are currently trading around the $560-mark.

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