Add to Amazon.com (AMZN) on Weakness, Says Pacific Crest

Pacific Crest maintained an Overweight rating on Amazon.com (NASDAQ: AMZN) with a price target of $800. Analyst Edward Yruma noted strong holiday trends, and he thinks it will continue to disrupt the retail environment. Yruma sees a Q4 sales increase of 22% and said the company was well positioned heading into Q1.

The stock is one of Pacific Crest's favorite long-term ideas, and investors are advised to add on weakness.

"We think that holiday 2015 was a good one for Amazon given its focus on non-apparel goods. ComScore reported Amazon.com's unique visitors increased 7.8% y/y over the holiday (Nov./Dec. desktop) while ChannelAdvisor estimates 17% holiday sales growth. We believe that Star Wars was a driver behind better non-apparel sales and also noted that last-minute shipping issues seemed less commonplace than last year," said Yruma.

"We estimate that Amazon grew Q4 sales 22% y/y, roughly in line with the estimate from ChannelAdvisor for up 17%. Amazon is one of the most disruptive forces in retail and technology today. We think it will continue to take share and also benefit as total share accorded to e-commerce continues to grow," continued the analsyt. "Despite the near-term risk to margins and free cash flow as the AWS narrative shifts toward footprint expansion in 2016 as Amazon aggressively adds 11 new availability zones, we see elevated AWS investments as a bullish sign; it validates our thesis that AWS' cloud share gains are accelerating."

Yruma added, "The -12% QTD sell-off in AMZN shares partially factors in model seasonality and potential margin risk as AWS elevates investments in 2016. Add to positions on weakness."

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 $596.53 yesterday.

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