Amazon: Color on Quarter
- Mizuho lowers their AMZN tgt to $685 from $720. They note Amazon is seeing greater third-party FBA-related units flow through, thus requiring more investment in fulfillment. Ultimately, FBA comes at higher margin than 1P sales, so they believe these investments will drive revenue and margin improvement over time. They don't believe this marks another major investment cycle, so they do see CSOI margins continuing to improve; Buy.
- RBC lowers their AMZN tgt to $715 from $775. Expectations (including their) may need to be tempered. But this is temporary. And their ‘Net stock-picking history has taught us that Expectations Corrections can create great Buying opportunities. Based on their ULT reports, they still see AMZN's Retail Business as being in Prime Flywheel Mode & they still view AWS momentum as one of the most powerful trends in Tech today. AMZN remains their #2 Long in the ‘Net Sector.
- Stifel notes Amazon missed some important estimate or maybe the stock shouldn't have gone up 9% during the day on 1/28 followed by an 11% decline after hours vs. just remaining roughly flat for the day. Revenue / CSOI for 4Q:15 was toward the high-end of guidance. Revenue/CSOI guidance for 1Q:16 was roughly in line with their estimates despite incremental negative currency impact. The long-term remains unchanged. The stock is up 375x since the IPO in 1997 and the co continues doing what it has been doing from the beginning -- driving growth and market share to maximize long-term operating profit and free cash flow dollars. Should we now start debating whether it is over this time or just buy the dip and move on to more legitimate debates? They think the latter -- buy the dip, it won't last.
- Needham notes Amazon reported 4Q15 results slightly below consensus, which did not measure up to the high expectations. While some of the short fall was attributable to FX, they believe the holiday ecommerce trends likely tailed off faster than expected and the rev mix favored Amazon's third-party (3P) business. Thestrength of 3P propelled the adoption of Fulfillment by Amazon (FBA), which lifted variable costs above expectations. Consequently, operating income fell below expectations despite the strong growth of high-margin AWS revenue. Q1 guidance was mixed with rev upside likely driven by Prime and AWS, but lower than expected operating income as Amazon continues to invest in Prime, as well as ongoing investment in fulfillment, marketing and technology and content; Hold.