UBS Group expects Amazon’s (AMZN.US) cloud business may accelerate growth, raising the target price to $279.

Amazon (AMZN.US) is set to release its third-quarter earnings during the day. UBS Group forecasts that Amazon’s operating profit for the third quarter, despite remaining within the guidance range of $15.5 billion to $20.5 billion, already includes a provision of $2.5 billion for the settlement with the Federal Trade Commission regarding Prime. However, due to the company planning to recognize this expense in the fourth quarter, the operating profit guidance may fall below market expectations. The bank has raised its forecasts for Amazon’s gross transaction value of first-party and third-party sales as well as advertising revenue for the remainder of this year, next year, and the first half of the following year by approximately 1%.

The bank expects that market focus will likely be entirely on cloud business growth rates, with current market expectations at an annual increase of 18%. Growth could potentially accelerate in the fourth quarter and into next year as the company brings additional capacity online through Project Rainier.

The bank also noted that Amazon’s stock price has risen by only 4% year-to-date, and the favorable impact from its investments and capital expenditures in e-commerce, cloud services, content and advertising, as well as Kuiper, remains largely unreflected. The bank has raised its target price for Amazon from $271 to $279 while maintaining a ‘Buy’ rating.