Wells Fargo Raises Price Valuation Range on Amazon (AMZN), Slashes Estimates Due to Guidance

July 27, 2011 10:43 AM EDT Send to a Friend
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Wells Fargo is reiterating its Outperform rating on shares of Amazon.com (NASDAQ: AMZN) and is raising its valuation range from $197-$226 to $200-$239.

The company reported solid Q2 results with 51 percent revenue growth which helped drive the stock higher on following the close on July 26. Top-line growth accelerated in the quarter from 36 percent in Q1 to 44 percent.

Amazon released its operating margin guidance well below expectations which has caused the firm to cut its estimates substantially. Management is forecasting Q3 revenue of $10.3-$11.1 billion and operating income of $20-$170 million.

To go inline with the company's new guidance, Wells cut its Q3 operating income estimate from $415 million to $163 million, and its 2011 estimate from $1.73 billion to $1.08 billion. Free cash flow estimate was cut from $3.56 billion to $2.68 billion. The firms EPS estimates decrease from $0.69 to $0.27 for Q3 and from $2.75 to $1.82 for 2011. For 2012, the firm also cut its EPS estimate from $4.01 to $2.08.

For more ratings news on Amazon.com click here and for the rating history of Amazon.com click here.

Shares of Amazon.com closed at $214.18 yesterday.


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