Ahead of the Bell: Amazon shares soar on strong 3Q

posted: 32 DAYS 16 HOURS AGO

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PHILADELPHIA -Shares of Amazon.com Inc. rose Friday after several analysts upgraded the online retailer in light of better than expected third-quarter results, a performance they say bodes well for future quarters.

Shares of the Seattle company rose by $16.55, or 17.7 percent, to $110 in premarket trading.

Jefferies & Co. analyst Youssef Squali upgraded the shares to "Buy" from "Hold" and raised his price target to $120 from $88. He said Amazon's performance in the quarter proves that consumer demand is recovering.

Janney analyst Shawn Milne also upgraded Amazon, to "Buy" from "Neutral." He sees Amazon continuing to gain market share despite tough competition from online sites such as eBay Inc.

He said the company has a good handle on costs, which will drive up earnings. Milne expects Amazon to post annual earnings growth of 25 percent over the next two to three years. The analyst raised his estimate for Amazon shares to $135 from $82.

Milne also raised his fiscal 2009 sales and earnings estimates to $23.8 billion and $2.57 per share, respectively, from $22.6 billion and $2.38. For fiscal 2010, he raised his sales forecast to $28.6 billion from $26.5 billion and earnings of $3.10 from $2.75. The analyst's new estimates exceeded Wall Street's consensus forecasts.

Oppenheimer analyst Brian Nagel, who also increased his 2009 earnings estimate for the company, said a sales uptick in the third quarter sets the stage for even better revenue in coming quarters as consumer demand improves. He said sales at Amazon have improved "markedly" in all divisions and product categories.

Thursday, Amazon said it expects to report fourth-quarter sales of $8.13 billion to $9.13 billion — analysts are forecasting $8.4 billion on average, according to Thomson Reuters.

Amazon blew away Wall Street's forecasts by posting a 69 percent increase in third-quarter earnings on sales of $5.45 billion.

2009-10-23 09:34:23