Will Amazon.com (AMZN) Sell Another Strong Quarter to Investors? (EBAY, BKS, AAPL, More...)

Shares of Amazon.com (Nasdaq: AMZN) are trading higher ahead of the company's second quarter earnings release, expected after the market closes today, July 22. Shares are up 1.3% to $119 in mid-day trading.

The company is expected to report EPS of $0.55 on revs of $6.54 billion. For the first quarter, AMZN reported EPS of $0.66 and revs of $7.13 billion, both edging out Street views. Last year, for Q209, the company posted EPS of $0.32 and revs of $4.65 billion, compared to the consensus of $0.32 EPS and $4.69 billion in revs.

Shares of the stock have dipped pretty good, down 17% to $109.26 at the end of June. Shares gained a little back since the end of the quarter, but are still up about 12.6% since the onset of 2010. Here's a fun fact: shares are just about 13.5% higher than the end of 1999, on an adjusted basis.

One caveat that many investors may have about Amazon stock is that it seems richly valued. Currently, shares are going for a forward P/E of 40.45x FY10 EPS estimates. By comparison, eBay (Nasdaq: EBAY) is at 12.7x, Barnes & Noble (NYSE: BKS) is trading at an astounding 120x, and Wal-Mart Stores (NYSE: WMT) is at 12.6x.

Data from Bloomberg shows that 22 analyst have a Buy rating on the shares, 12 have a Hold, and three suggest to Sell. The analyst price target consensus is $157.57, with a high of $190, and a low of $110.

Analyst Ratings Through the Quarter
This may be a bearish sign, who knows, but here are some select headlines following Amazon's first quarter release: "One of the Best-Run Companies in America [Needham]," "Still Sees 25%+ Upside [Citi]," "Amazon Can Grow Revenue Faster and Longer than We or Consensus Forecast [Goldman]."

In May, Standpoint upgraded the shares from Underperform to Hold.

Stifel Nicolaus started the company with a Buy rating and $160 price target.

In June, Goldman Sachs added the shares to its Conviction Buy List.

Benchmark maintained their Buy rating, but cut their forecast from $180 to $151.

Susquehanna downgraded from Positive to Neutral and maintained a $180 price target.

Summary
Amazon's Kindle may have seen some pressure in sales through the quarter coming from Apple's (Nasdaq: AAPL) iPad, but the cunning eTailer brought the device to Target (NYSE: TGT) in early June AND lowered the price on the device. Apple's iPad starts at $499, and the Kindle begins at $189. The price cut appear to have worked for Amazon as the company announced that is sold more Kindle books than hardcover books in the quarter.

Benchmark said that they expect to see a strong quarter, with "net revenues forecast up 42% Y/Y leading to projected EBITDA growth of 64% Y/Y." Benchmark notes that declining global demand in H210 is an overhang for Amazon. Their EPS estimate is $0.55 on revs of $6.6 billion.

BGC Partners have a Hold on the stock, with a price target of $110. They sees reported revs of $6.9 billion and an EPS of $0.64, both ahead of consensus. Their concerns lay with slowdown from the consumer in May and June, including in eCommerce. They note that Amazon reported eBook sales recently took over hardcover sales [no data on softcover is available], and the move was likely spurred by a drop in the price of the Kindle, potentially skewing numbers upward.

Deutsche has a Buy on Amazon, with a price target of $166. DB expects inline results out of Amazon, with revs of $6.46 billion and an EPS of $0.71. Deutsche sees gross margin declining to 23.2%, compared to $24.4% in Q209. DB thinks that Amazon will see little slowdown, based on their emphasis on user experience and competitive pricing.

Piper Jaffray rates at Overweight, with a price target of $176. They expect an EPS of $0.57 on $6.4 billion in revs. The revenue growth is at $38% Y/Y. Piper's apparel/mass merchant index shows a $14% Y/Y growth rate in April/May. Piper also notes that, according to the Association of American Publishers, digital book sales have growth 190% Y/Y, and account for 5% of total book sales.

Finally, at the end of June, Amazon announced that they acquired satirical sales-site Woot.com. Anyone who has gone to the one-deal-per-day website knows that, even if you don't like or need the product that they're selling, the flat-rate shipping and quirky dialogue on the site may just compel you...because, hey...I might need a tri-LED book light for $4.99. Especially since I just bought a Kindle [sigh...darn you Woot].

As a reminder, eBay reported their second quarter earnings on July 21, yesterday, and beat on both the top and bottom line, thanks in part to contributions from their Paypal business, which jumped 26% in quarterly profits. Will this affect Amazon? Is the economy finally bouncing back, and consumers opening their wallets...?

Amazon.com Inc. is expected to release their Q210 earnings on Thursday, July 22, 2010, at approximately 4:00pm EDT. Stay tuned to StreetInsider.com's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.

You May Also Be Interested In

• SEC accuses ex-BofA senior banker Satsky of insider trading - Bloomberg
• Milestone Pharmaceuticals starts Phase 3 AFib-RVR trial for etripamil
• Singularity Future Technology closes $5M registered direct offering