SunTrust Robinson Humphrey Remains Sidelined on Amazon.com (AMZN); Reiterates $850 Price Target
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SunTrust Robinson Humphrey reiterated a Hold rating and $850.00 price target on Amazon.com (NASDAQ: AMZN) following the company's 3Q earnings report. Incremental margins for 3Q were just 2% on a consolidated basis. Retail incremental margins were -2% as North American margins expanded just 20bps and international margins fell on heavy investment. 4Q margins are expected to decline YoY.
Analyst Robert Peck commented, "Amazon reported strong 3Q unit, revenue and gross profit growth versus tougher comps. However, 4Q guidance for margins was below expectations and at the mid-point would represent the first operating margin decline in over 2 years as the company invests heavily in video, fulfillment/ Prime, grocery, India and other initiatives. Investments to expand Amazon’s core customer proposition and stickiness are prudent, though we believe there may be more near-term margin pressure for investors to discount; maintain Hold, $850 2017 PT, implying 0.6x GMV for retail and 7.5x Revenue for AWS."
Shares of Amazon.com closed at $818.36 yesterday.
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