Goldman Sachs Upgrades Amazon (AMZN) to Conviction Buy
- Wall St. weighed by Apple but banks shine on
- TPG Capital Said Willing to Pay Up to $15 Per Share to Acquire Cypress (CY) - Source
- Veeva Systems (VEEV) Tops Q2 EPS by 2c; Issues Street Guidance
- Palo Alto Networks (PANW) Reports In-Line Q4 EPS; Guides FY17 EPS Above Views; Approves $500M Stock Buyback
- After-Hours Stock Movers 08/30: (VEEV) (GSAT) (NCS) Higher; (AVAV) (MDCO) (HRB) (PANW) Lower (more...)
Goldman Sachs upgraded Amazon.com (NASDAQ: AMZN) from Buy to Conviction Buy with a price target of $400.00 (from $430.00). Analyst Heath P. Terry thinks high capital returns outweigh margins worries.
"We are adding Amazon to the Conviction List as we believe it represents one of the best risk/reward propositions in the sector following the recent sector rotation. While concerns over Amazon Web Services (AWS) pricing, slowing Media growth, and ongoing margin pressures are likely to persist, we believe – given its track record of delivering consistently high returns on invested capital – the ongoing investment in fulfillment and infrastructure will widen Amazon’s competitive lead through initiatives such as Fresh, AWS, digital media, and faster fulfillment and product availability, driving incremental growth and, ultimately, profitability," said Terry.
"While capex at Amazon has risen ~10X over the past five years compared to revenue growth of ~4X over the same period, its cash returns on invested capital, 39% in 2013, have consistently been among the highest in Internet and well above that of other sectors (Exhibit 1). We believe that context is critical when factoring in the operating margin compression driven by this investment," added the analyst. "We see Amazon’s investment in AWS, Fresh (and the fulfillment infrastructure that comes with it), and hardware (with the digital media ecosystem it enables) as driving incremental growth and furthering Amazon’s high returns, given the margin profile of those businesses at scale. Meanwhile, the acceleration in the EGM business is, we believe, more indicative of the direction of the core retail business."
Shares of Amazon.com closed at $332.41 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Piper Cuts Ests on G-III Apparel Group (GIII) Following Q2 Report; PT Drops to $31
- Nomura Securities Raises Price Target on Tiffany & Co. (TIF) Following Better-Than-Expected 2Q
- OraSure Technologies (OSUR): Progress for Zika & Microbiome, Raising PT - Jefferies
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Analyst PT Change, Hot Upgrades, Upgrades
Related EntitiesGoldman Sachs Conviction Buy List, Goldman Sachs
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!