Piper Jaffray is out very positive on Amazon.com (NASDAQ:AMZN) raising their price target to $172 (prev. $163) ahead of December quarter.
Data points from Amazon indicating peak day orders increased 51% y/y and from ChannelAdvisor that its clients' December same-store sales on Amazon accelerated to +75% y/y lead Piper Jaffray to believe Amazon will report meaningful upside to the street's +33% y/y December quarter revenue growth estimate, which they believe will move the stock higher. Firm raises their December quarter revenue and GAAP EPS estimates to $9.3 billion (+35% y/y constant-currency) and $0.83 from $9.0 billion (+31% y/y) and $0.80 previously.
Amazon peak day orders increased 51% y/y to 9.5 million this holiday season, suggesting upside to the street's +33% y/y revenue growth estimate. Impressively, +51% y/y was the strongest y/y peak day order growth in 7 years of historical data and up from +17% y/y in 2008. In 2008, Amazon's peak day units increased 17% y/y while total December quarter sales increased 24% y/y (constant-currency) and in 2007, Amazon's peak day units increased 35% y/y while Dec. quarter sales increased 37% y/y (constant-currency).
Piper believes Amazon's retail eCommerce market share gains accelerated in the December quarter. ChannelAdvisor, an advisor to more than 3,000 online merchants, reported client same-store sales on the Amazon platform accelerated to +75% y/y in the month of December through the 20th, up from +70% y/y in Nov. and +61% y/y in October. PJCO's new +32% y/y Dec. quarter North American revenue growth estimate for Amazon would be ~2900 bps faster than overall eCommerce sales growth compared to comScore's +3% y/y for the quarter. Amazon has outpaced industry sales growth by 2100 bps on average each of the last 9 quarters and outpaced industry growth by 2600 bps in the Sept. quarter.
Operating Leverage Over Time. While choppy from quarter to quarter, over the long-run the firm believes Amazon can achieve near 10% PF operating margins. Their 2011E PF EPS would go to $4.67 with 8.0% PF op. margins from $4.31 (7.3%) currently.
Recent Operating Leverage. Amazon has low operating margins; the company's pro forma operating margins are in the mid-single digit range, averaging 6.5% of revenues through the first 9 months of 2009, up from 5.9% through the first 9 months of 2008. In Q3, Amazon's fulfillment expense (as a % of revenues) declined 80 bps y/y, mostly due to operating efficiencies from the opening of three new distribution facilities in the third quarter of 2008. They expect Amazon to continue to experience increased operating efficiencies from these warehouses in the near-term, which should translate to higher margins and profits.
Notablecalls: This is the new Street high price target for AMZN, surpassing the $170/sh target from Citigroup only a week ago. Piper is calling for a big Q4 (EPS 15% above consensus) and I think it's only matter of time when we see price targets in the $200's.
The S&P500 is pushing to new 52-week highs as I'm writing this which tells me AMZN may be today's weapon of choice to play the upside. My first target is $141, followed by $142+ if it can punch trough the 1st level with enough conviction.
Data points from Amazon indicating peak day orders increased 51% y/y and from ChannelAdvisor that its clients' December same-store sales on Amazon accelerated to +75% y/y lead Piper Jaffray to believe Amazon will report meaningful upside to the street's +33% y/y December quarter revenue growth estimate, which they believe will move the stock higher. Firm raises their December quarter revenue and GAAP EPS estimates to $9.3 billion (+35% y/y constant-currency) and $0.83 from $9.0 billion (+31% y/y) and $0.80 previously.
Amazon peak day orders increased 51% y/y to 9.5 million this holiday season, suggesting upside to the street's +33% y/y revenue growth estimate. Impressively, +51% y/y was the strongest y/y peak day order growth in 7 years of historical data and up from +17% y/y in 2008. In 2008, Amazon's peak day units increased 17% y/y while total December quarter sales increased 24% y/y (constant-currency) and in 2007, Amazon's peak day units increased 35% y/y while Dec. quarter sales increased 37% y/y (constant-currency).Piper believes Amazon's retail eCommerce market share gains accelerated in the December quarter. ChannelAdvisor, an advisor to more than 3,000 online merchants, reported client same-store sales on the Amazon platform accelerated to +75% y/y in the month of December through the 20th, up from +70% y/y in Nov. and +61% y/y in October. PJCO's new +32% y/y Dec. quarter North American revenue growth estimate for Amazon would be ~2900 bps faster than overall eCommerce sales growth compared to comScore's +3% y/y for the quarter. Amazon has outpaced industry sales growth by 2100 bps on average each of the last 9 quarters and outpaced industry growth by 2600 bps in the Sept. quarter.
Operating Leverage Over Time. While choppy from quarter to quarter, over the long-run the firm believes Amazon can achieve near 10% PF operating margins. Their 2011E PF EPS would go to $4.67 with 8.0% PF op. margins from $4.31 (7.3%) currently.
Recent Operating Leverage. Amazon has low operating margins; the company's pro forma operating margins are in the mid-single digit range, averaging 6.5% of revenues through the first 9 months of 2009, up from 5.9% through the first 9 months of 2008. In Q3, Amazon's fulfillment expense (as a % of revenues) declined 80 bps y/y, mostly due to operating efficiencies from the opening of three new distribution facilities in the third quarter of 2008. They expect Amazon to continue to experience increased operating efficiencies from these warehouses in the near-term, which should translate to higher margins and profits.
Notablecalls: This is the new Street high price target for AMZN, surpassing the $170/sh target from Citigroup only a week ago. Piper is calling for a big Q4 (EPS 15% above consensus) and I think it's only matter of time when we see price targets in the $200's.
The S&P500 is pushing to new 52-week highs as I'm writing this which tells me AMZN may be today's weapon of choice to play the upside. My first target is $141, followed by $142+ if it can punch trough the 1st level with enough conviction.
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