Thursday, January 31, 2008 (NASDAQ:AMZN): Bounce?

Desite the 12% sell-off in after hours, we have several firms out in defense of (NASDAQ:AMZN) this morning:

- Citigroup says they are aggressive buyers @ $65 because: 1) Q4 fundies unambiguously improved - revenue growth acceleration/margin expansion; 2) AMZN is clearly taking ecommerce share; 3) AMZN demonstrating signs of successful product innovation with digital media; 4) AMZN showing NO recession impact; 5) Int'l now at record 46% of total; 6) AMZN guidance likely conservative - AMZN exceeded initial '07 op income guidance by 50%, due in part to 30% margin upside - 5.8% actual vs. 4.5% initial guide; & 7) AMZN trading at 5.4% '08 FCF yield. Price tgt goes to $97 from $119.

- RBC Capital notes Amazon reported a decent 4Q, but the focus was really the FY08 guidance, and in particular, the operating margin guidance. While revenue guidance calling for 26%-33% YOY growth came in ahead of consensus, pro forma operating margin guidance at 5.5%-6.2% came in below consensus at the midpoint. Firm notes that Amazon has historically given conservative initial fiscal year guidance only to revise upward throughout the year; they believe 2008 should be no different.Their thesis that AMZN will continue to gain share, outgrow e- commerce, and ultimately win vs. its competition remains unchanged. Would add to positions on weakness. Maintains Outperform. New tgt is $100 vs prev. $113.

- Banc of America reiterates Buy rating on AMZN and adjust tgt to $110 from $115. They believe the recent sell-off represents an attractive buying opportunity for investors looking for exposure to one of the best plays in worldwide eCommerce growth.

- Morgan Stanley notes that with AMZN posting a strong CQ4 after months of nail-biting regarding retailshopping trends, AMZN shares traded down 12% in the after-market over margin concerns. Firm believes investors who are overly focused on margin expansion may be “fighting with windmills” and miss the opportunity with the stock. MSCO's conviction in AMZN’s ability to deliver 31%+ / 36%+ Y/Y growth in C2008E revenue / operating income (ex. stock comp.) is high, and they would be buyers of AMZN shares on weakness. DCF valuation is $125 (using 11.2% discount rate / 6% terminal growth rate). Believes courage + patience will win out here, reits Overweight.

Notablecalls: I think AMZN is a bounce candidate around $66.

1 comment:

Tom said...

Same thing was said about AAPL when earnings came out but it continued to go down.
I personally like AMZN think they are great company not so sure where bottom is.
I assume your comment was for short term trading bounce.