Friday, March 14, 2008 (NASDAQ:AMZN): Growth at is actually accelerating - Citigroup

- Citigroup is out positive on (NASDAQ:AMZN) noting that despite recessionary conditions, they view AMZN as having one of the strongest fundamental outlooks in the Internet sector, and 5.2% '08 FCF yield provides long-term investors with an attractive entry/adding price. Key Elements Of The AMZN Long Thesis Remain Well Intact --

1. Still significant margin expansion potential;

2. Ongoing market share gains;

3. High levels of product innovation;

4) Material International exposure.

While overall U.S. January ecommerce data indicates modest deceleration, Amazon's U.S. traffic trends through February show acceleration - 14% Y/Y growth QTD vs. 13% in Q4. Int'l Growth Drivers - Amazon Prime (rolled out in Japan, Germany & UK in H2:07) and Category Expansion (Apparel, Sporting Goods, Jewelry/Watches & Health/Personal Care in '07) are underappreciated drivers of future International revenue growth & potential accelerators.

Int'l 3rd Party = Source Of EPS Growth - New proprietary analysis indicates that $100MM in incremental 3rd party sales boosts International gross margin by roughly 10 bps and generates $0.01 in incremental EPS.

Today, they are reiterating their Buy and providing four key updates to their AMZN Long Thesis. In this recessionary environment and in this tape, they have two choices: A) Publish an Internet Mattress Report or B) Continually re-test the Long theses. They choose the latter...

Tgt $97.

Notablecalls: Must say I was surprised by this call. I didn't know AMZN had so much going for it. Do read the full call if you have the chance. It's going to create buy interest this morning.


Joe said...

Growth accelerating? hahaha.... citi ought to scrutinize their analysts education credentials again to see whether they cleared high school. A sixth grader can identify that growth is decelerating. See the EPS growth rate over last 4 quarters and compare with numbers going forward. Hope the people managing money are smarter than Mr. Mahaney and can see through his call.

Parkite said...

Oh boy......Mahaney has been wrong on this all the way down. Check his updates. In Jan08 he reiterated buy w/a target around $120. He has little credibility on AMZN.