Amazon (AMZN) is scheduled to report results of its third fiscal quarter after the market close on Thursday, October 27, with a conference call scheduled for 5:30 pm ET. What to watch for:

BEST INTERNET IDEA INTO RESULTS: In a research note on Wednesday, JPMorgan analyst Doug Anmuth kept an Overweight rating on Amazon.com with a $175 price target into the company's third quarter results on October 27. Since the Q2 earnings report, the shares have traded down 28% as concerns have mounted around slower consumer spending and the macro impact on cloud, Anmuth told investors in a research note. However, he remains confident that Amazon can re-accelerate revenue growth and expand margins into 2023, largely driven by retail improvement and "still solid" Web Services growth. Amazon remains Anmuth's best idea in internet.

Last week, the analyst lowered the firm's price target on Amazon to $175 from $185 saying sentiment remained cautious across the internet sector with secular growth slowing, competition increasing, and macro concerns weighing.

TARGET CUTS AHEAD OF EARNINGS: On Monday, MKM Partners analyst Rohit Kulkarni lowered the firm's price target on Amazon.com to $165 from $170 but maintained a Buy rating on the shares. The analyst is cutting his full year 2022 earnings per share estimates to 10c from 22c due to recent events, FX and macro factors, and his updated thoughts on the pandemic lapping effect on various Amazon segments. The stock remains his preferred Mega Cap as he expects the company to gain market share amidst soft e-commerce industry growth and CapEx trends softening, which should drive its 2023 free cash flow acceleration, Kulkarni told investors in a research note.

Meanwhile, Credit Suisse analyst Stephen Ju lowered the firm's price target on Amazon.com to $159 from $170, keeping an Outperform rating on the shares. The analyst expects Q3 results to provide another data point for Amazon's entry into a harvest period following aggressive investments since the onset of the pandemic. Amazon should move past peak OpEx as well as peak CapEx dollar increases as of Q3, which Ju expects to translate into the resumption of free cash flow growth in the same quarter as well as operating margin expansion starting in Q4. He believes Amazon can deliver margin expansion even as he factors in a stepdown in his gross merchandise value growth assumption for 2023 as well as AWS, which the analyst expects to grow revenue dollars by $14.5B.

EARLY ACCESS SALE: Amazon announced it "kicked off holiday celebrations earlier than ever during Prime Early Access Sale" and that Prime members around the world purchased items across toys, home, beauty and personal care, apparel, and electronics. " "Our Prime Early Access Sale was a great kickoff to the holidays, and the best part is that it's only the beginning. Customers will find millions of must-have deals throughout the season that will help them continue to save money on gifts for loved ones. We know our employees, vendors, and selling partners show incredible dedication to delivering a great experience during the holidays, and we are grateful for their continued commitment to serving customers during this special time of the year," added Doug Herrington, CEO of Amazon Worldwide Stores. Amazon noted that "some of the best-selling categories worldwide were Apparel, Home, Toys, and Amazon devices" and that Prime members "ordered more than 100 million items from Amazon's selling partners, most of which are small businesses and medium-sized businesses."

After Amazon announced some data points from its Prime Early Access sale held Oct. 13-14, including disclosing that "tens of millions" of Prime members "ordered more than 100 million items" from third-party vendors, BofA analyst Justin Post noted that the press release for its July event stated over 100M "small business items" and the latest release did not say this event was the "biggest Prime Day ever," as July's did. Data service Numerator reported that Amazon's Prime Early Access sales results were lower than typical Prime Day sales, which he thinks makes sense given the recent Prime Day in July, Post added. He estimates $8B in gross merchandise value, or GMV, for the latest two-day event, down 25% from $10.7B in GMV for the July event, Post noted.

OUTLOOK: During the company’s last earnings call, Amazon said it saw third quarter revenue $125B-$130B, with consensus at $127.5B, and net sales between $125.0B-$130.0B, or to grow between 13% and 17% compared with third quarter 2021. This guidance anticipates an unfavorable impact of approximately 390 basis points from foreign exchange rates. Operating income was also expected to be between 0c and $3.5B, compared with $4.9B in third quarter 2021. This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded, Amazon said.

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