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Amazon earnings: What to expect

JP Mangalindan
Chief Tech Correspondent

Wall Street can’t get enough of Amazon (AMZN).

The Seattle tech giant, whose stock is up almost 55% so far this year, is scheduled to report second-quarter earnings on Thursday afternoon after the markets close.

Analysts are generally expecting earnings-per-share of $2.48 on revenues of $53.47 billion — up from a disappointing earnings-per-share of $.40 on revenues of $37.96 billion during the same period last year.

Piper Jaffray and Credit Suisse raised their price targets from $1,850 to $2,075 and $1950 to $2000, respectively, due to stable growth in areas like retail and cloud computing.

Amazon Source: REUTERS/Charles Platiau

Look for Amazon to announce more milestones from this year’s 36-hour Prime Day, which the company says helped sign more Prime members in one day than any other day in the company’s history. And despite sitewide problems during the first few hours of Prime Day, Amazon says small- and medium-size businesses generated $1 billion in sales during the first 25 hours or so of the annual sales event.   

Looking ahead, Credit Suisse sees huge potential upside for Amazon in several newer verticals the company has doubled-down on in more recent years.

“The largest category opportunities that still lie ahead for Amazon remain those that are non-homogeneous and require greater service level and handling – namely groceries, home improvement/furniture and apparel, which are 3%, 4% and 20% online penetrated, with $846 billion, $392 billion and $300 billion in dollars remaining offline in the U.S.,” Credit Suisse analyst Stephen Ju wrote in a report published last week.

Enter apparel

Apparel, in particular, could prove to be a major growth area for Amazon over the medium-to-long term. Although Amazon Fashion sold $15 billion in gross merchandise volume in 2017, UBS estimates GMV could grow to $40 billion in GMV in 2022, occupying around 32% of the total North America market for online apparel sales.

Much of that potential growth will come from Amazon’s more recent fashion efforts. Those efforts include snagging more well-known brands to selling their wares on Amazon.com, a steady increase in private label fashion products available in the U.S., and the nationwide rollout of Amazon Wardrobe, a service that allows Prime members to choose up to 8 items for users to try on at home for 7 days until Amazon charges the user.

“This ‘try before you go’ concept allows Amazon to promote its private label products while also collecting data about customer preferences,” UBS analyst Eric Sheridan wrote in a report released late last week.

Using its service as promotional vehicle for Amazon products? That’s as Amazon-esque a tactic as it can get.

JP Mangalindan is the Chief Tech Correspondent for Yahoo Finance covering the intersection of tech and business. Email story tips and musings to jpm@oath.com. Follow him on Twitter or Facebook.

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