Amazon.com’s (AMZN) retail margins, advertising revenue, and Amazon Web Services growth are likely to drive a Q1 beat, but the company is likely to face headwinds in Q2, BofA Securities said in a Monday note.
“We expect a 1Q beat, and while 2Q set up has some unusual q/q hurdles, we expect positive 1Q metrics and call commentary to be constructive,” said the investment firm. BofA Securities noted that positives for Q1 include Prime Video ads, improving AWS demand and AI traction, and greater-than-expected retail margin expansion, among others.
But while BAC aggregated credit and debit card and Bloomberg Second Measure data pointed to eCommerce upside in Q1, this could slow in Q2 because of certain holiday sales in the first quarter, the investment firm added. BofA Securities lowered its Q2 estimate for the company, saying recent sale events could have pulled forward some some demand for the period.
The analysts expect Amazon to guide Q2 revenue in a range of $144 billion to $150 billion.
Amazon.com is set to release its Q1 results on April 30.
BofA Securities maintained its buy rating on Amazon.com, with a price target of $204.