Nomura Securities Maintains a 'Neutral' on Amazon.com (AMZN); Inefficiencies of Scale
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Price: $262.65 -0.94%
Rating Summary:
68 Buy, 7 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
68 Buy, 7 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Nomura Securities maintains a 'Neutral' on Amazon.com (NASDAQ: AMZN) price target lowered from $220 to $200.
Analyst, Brian Nowak, said, "Investors are increasingly questioning Amazon’s long-term profitability and efficiency, as CSOI margins are under pressure and inventory turnover has fallen to new historical troughs. In the following note, we analyze the impact of Amazon’s changing business mix, as we expect the more fulfillment-intensive EGM business to grow from being 62% of the 2011 mix to 83% by 2016. In our view, this continuing mix shift creates a headwind that will stymie the company’s ability to drive significant long-term margin expansion and inventory productivity."
"Given the continued uncertainty around long-term profitability and less flattering cash flow dynamics associated with slowing inventory turns, we are lowering our price target to $200 driven mostly by a reduction in our long-term target CSOI margin (from 4% to 3%). We are still 14% below the Street’s 2013 CSOI estimate, and are wary of continued margin pressure as Amazon grows."
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 $192.33 yesterday.
Analyst, Brian Nowak, said, "Investors are increasingly questioning Amazon’s long-term profitability and efficiency, as CSOI margins are under pressure and inventory turnover has fallen to new historical troughs. In the following note, we analyze the impact of Amazon’s changing business mix, as we expect the more fulfillment-intensive EGM business to grow from being 62% of the 2011 mix to 83% by 2016. In our view, this continuing mix shift creates a headwind that will stymie the company’s ability to drive significant long-term margin expansion and inventory productivity."
"Given the continued uncertainty around long-term profitability and less flattering cash flow dynamics associated with slowing inventory turns, we are lowering our price target to $200 driven mostly by a reduction in our long-term target CSOI margin (from 4% to 3%). We are still 14% below the Street’s 2013 CSOI estimate, and are wary of continued margin pressure as Amazon grows."
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 $192.33 yesterday.
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