Amazon earnings: Will it finally break its losing streak?

Amazon a top pick for 2015: Analyst
Amazon a top pick for 2015: Analyst   

Amazon investors' fingers are crossed in hopes that the e-commerce giant will finally break its losing streak when it reports fourth-quarter earnings after Thursday's closing bell.

Amazon posted a negative earnings surprise for the past two quarters and in three of the last four quarters. After the company reported its third quarterly results in October, its stock fell 8 percent.

In general, the Seattle-based company has seen its stock decline a little more than 20 percent during the past year. Two big things that plagued it in 2014 were weak margins and its failed Amazon Fire phone.

So the Street will be watching closely to see if the company can turn things around in 2015.

Analysts expect the company to report earnings of 17 cents per share, a 67 percent decline from the period a year earlier, when it reported earnings of 51 cents per share, according to Thomson Reuters. The company is also expected to report sales of $29.67 billion, a 16 percent increase year over year.

Colin Gillis, a technology analyst at BGC, said in a recent note to clients that he sees this being a quarter the company turns things around.

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"After two quarters of GAAP income losses, we expect the company returns to profitability in the December quarter and we are modeling profitability for the March quarter," Gillis said in his note.

Gillis also raised his rating for the company to a "buy" from "hold" and maintains his price target of $340 for the company's stock.

Gillis cites several reasons for being positive on the stock.

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First, he said, Amazon resolved its dispute with the publisher Hachette in November over e-book pricing, which should help improve its North American media sales and profits in the near term.

Second, the company's expansion of its ecosystem, including its Prime business and its Amazon App Store, show promise for long term growth, Gillis said.

"As digital media continues to grow and Amazon continues to introduce its Prime members to its digital offerings, we expect media margins can continue to expand. We estimate Prime membership is 40 million worldwide," Gillis said.

Another area of Amazon's business Gillis sees driving growth is advertising. Gillis said this is attractive because it enables the company to send targeted messages based on consumer data such as their purchase history, content habits and geographical location.