(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Amazon.com Inc. (AMZN) has already risen by over 75% in the past year, and now analysts are looking for shares to increase by another 17%. Profits for the e-commerce company are expected to soar by more than six times in the coming third quarter, leading to the bullish outlook. 

The company blew out its second-quarter results, nearly double analysts’ estimates. Amazon reported earnings per share of $5.07, versus estimates of just $2.54. Revenue was a different story, falling shy of forecasts by nearly 1% at $52.9 billion. The strong beat for Amazon's soaring profits was on the success of the company’s web services unit (AWS) and advertising. 

Upping Estimates

AMZN Chart

AMZN data by YCharts

Analysts have upped their outlooks for the third quarter, lifting estimates by a stunning 80% over the past month, and are now looking for earnings to rise by six times last year’s results of $0.52 to $3.09. The outlook for revenue is in contrast to the profit outlook, with analysts lowering those estimates by more than 1%, and they now see revenue climbing by more than 30% to $57.04 billion.

For the full year, profit estimates are rising as well, with analysts upping those estimates by 37% over the past 30 days. Full-year earnings are now seen increasing by nearly four times. Revenue forecasts, like the third-quarter outlook, have been reduced by about 1% and are seen climbing by 32%. 

Price Targets Rise

AMZN Price Target Chart

The bullish earnings outlook is resulting in analysts upping their price targets on the stock, with the average price target now at $2,095, an increase of about 17% from the shares' current price of $1,785. Since the end of June, the average price target on the stock has increased by almost 11%. 

Spotty History

AMZN Quarterly EPS Estimates Chart

Despite the recent string of blowout quarterly results, Amazon’s history of strong earnings growth has always been spotty. It was just the second quarter of 2017 when the company reported results that were more than 70% below analysts’ estimates, at only $0.40 versus expectations for $1.40.  It was the third quarter of 2016 that saw Amazon's earnings miss forecasts by more than 35%. 

This spotty earnings history does put at risk the bullish outlook for profits and the stock price. However, until proven otherwise, the ball's in Amazon's court, and the stock still has the hearts of bullish investors and analysts. 

Michael Kramer is the founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdingsInformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.