Cowen Bullish on Amazon Before Earnings

The brokerage firm thinks advertising and AWS drove strong revenue growth for AMZN

Cowen chimed in on Amazon.com, Inc. (NASDAQ:AMZN) ahead of the e-tailer's quarterly earnings report, due after the market closes next Thursday, Jan. 31. The analyst believes Amazon's fourth-quarter earnings will arrive at the top end of previous estimates, driven by strong revenue growth in its advertising business, Amazon Web Services and e-commerce. This comes as the Wall Street Journal reports on the company's budding partnerships with firms to develop exclusive products for Amazon.com (subscription required).

Most brokerages are upbeat on the FAANG stock already, with 25 of 27 in coverage maintaining a "buy" or better rating -- and not a single "sell" on the books. Plus, the average 12-month price target of $2,138.39 is a 28.2% premium to AMZN's current price of $1,667.45, up 0.8% so far today.

This optimism is seen in the options pits, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Amazon stock's 10-day call/put volume ratio of 1.31 ranks in the 89th annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip.

While Cowen is upbeat about AMZN's fourth-quarter earnings, it was a rough three-month stretch on the charts for the FAANG name. After entering October trading near its Sept. 4 record high of $2,050.50, the shares plunged all the way to a 10-month low of $1,307 by Dec. 24 -- bottoming near their 80-week moving average. Since then, Amazon has gained almost 28%.