Amazon (AMZN) PT Trimmed to $725 at Macquarie

Macquarie analyst Ben Schachter reiterated an Outperform rating but lowered his price target on Amazon.com (NASDAQ: AMZN) to $725.00 (from $760.00) following the Q4 miss.

Schachter commented, "Going into the AMZN call, the number one concern was the fear of a new investment cycle. Coming out of the call, some will see that fear being realized. However, this is a demand driven investment cycle, and over the longer-term, that is a very good reason to invest. Basically, what is clearly happening is that there is too much demand for AMZN’s products and services, particularly related to Prime customers and FBA sellers. This is a high-class problem to have, however it is a problem until solved. Fulfillment costs ramped in 4Q, with variable costs rising to meet the demand from both constituents. Essentially, AMZN did what it had to do in order to meet customer expectations even at the cost of negatively impacting profitability. Additionally, the accounting also impacts the margin because 3P sales are booked on a net revenue basis. We believe that Bezos will spend to fix the problem and make sure that AMZN can meet peak demand in a more efficient manner, however, and importantly, we believe that as AMZN continues to learn and more efficiently ship product, it will see leverage."

The analyst also highlighted AMZN stated that 2015 worldwide paid Prime memberships increased 51%, including 47% in the U.S. Based on the most conservative possible estimate, they can definitely say that AMZN has at least 46mm Prime subscribers worldwide with the actual figure possibly substantially higher.

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 $635.35 yesterday.

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