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Amazon (AMZN) Price Target Trimmed to $420 at RBC Capital on Mixed Quarter

October 24, 2014 6:52 AM EDT
Get Alerts AMZN Hot Sheet
Price: $180.38 +0.31%

Rating Summary:
    65 Buy, 5 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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RBC Capital analyst Mark Mahaney lowered his price target on Amazon.com (NASDAQ: AMZN) to $420.00 (from $435.00) following mixed Q3 results but maintained an Outperform rating.

The keys, according to the analyst: Positives: 1) Sustained EGM Revenue Growth – despite modestly tougher comps, an intrinsically healthy result; 2) Impressive Gross Margin – despite lackluster AWS revenue growth…Q3 Gross Margin of 29.7% is likely the company’s highest Q3 ever; 3) Metrics Hung In – 16% Y/Y growth in Active Cust. very consistent; 21% Paid Unit growth was the lowest ever, but a modest 200 bps decel vs. Q3; & 4) Cash Flow Continues To Improve -- $5.71B in TTM OCF is the highest in many years. Negatives: 1) Weak Media Revenue Growth – Q3 marked the 8th consecutive quarter of sub-10% Y/Y Int’l Media revenue growth, and now NA Media growth has started to fade; 2) Anemic Q3 Operating Margin Guide – 0.00002% (ok, it was 0.2%, but the “point” remains…); & 3) Outlook For Probable Sub-20% Revenue growth In Q4…."

The firm's ’14 revenue estimate decreases 3% to $89 billion.

For an analyst ratings summary and ratings history on Amazon.com click here. For more ratings news on Amazon.com click here.

Shares of Amazon.com closed at $313.18 yesterday.



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RBC Capital, Mark Mahaney