Amazon.com Inc (NASDAQ:AMZN) saw its shares jump higher on Friday after the internet shopping giant posted quarterly results well above Wall Street expectations after-hours on Thursday.
The Nasdaq-listed firm spotlighted the expansion of its one-day shipping program, which came in under budget, and a jump in membership of its Prime loyalty club.
Amazon said revenue from subscription fees grew by 32% to $5.2 billion for the quarter ended December 31, as more shoppers signed up for Prime than in any period prior.
The group saw its net quarterly sales rise by 21% to $87.4 billion, while net income increased by 8% to $3.3 billion, with both figures over $1 billion more than analysts had expected.
Amazon also forecast operating income of up to $4.2 billion in the current quarter, albeit down from $4.4 billion in the previous year.
In a statement, Amazon’s chief executive, Jeff Bezos noted that the world’s biggest online retailer now has more than 150 million paid members in its loyalty club Prime, a 50% increase from its last disclosure in April 2018.
In morning trade in New York, Amazon shares were 9.5% higher at $2,047.55, putting the online retailer back close to the $1 trillion market capitalisation club.
Oppenheimer target price raised
In a note to clients, analysts at Oppenheimer raised their target price for Amazon.com to $2,400 from $2,040 as they rolled up their valuation framework to 2021 and maintained an ‘outperform’ rating on the internet retailer’s stock.
They pointed out: “AWS revenue and margins were better than feared, while ecommerce gross profit growth was consistent with 3Q, as higher 3P/FBA demand offset added costs from 1-Day/Same-Day delivery investments.
“Prime subs now at 150M, up 50% from April 2018, providing $18B in annual funding for investment in future products and geographic expansion. Advertising slowed, but still growing close to 50% y/y.”
The analysts said: “We now assume 2020 AWS revenue/EBIT up 30%/47%, aided by extended new datacenter life (from 3 to 4 years) and 1-Day Prime expenses tailing off, driving ecommerce gross profit up 18% y/y and consolidated EBITDA up +16%.”
— Adds analyst comment, updates share price —