Amazon.com's (AMZN) Price Target Raised to $985 at Deutsche Bank
Deutsche Bank maintained a Buy rating on Amazon.com (NASDAQ: AMZN) and raised its price target to $985.00 (from $900.00). Analyst Ross Sandler characterized Q2 results as a "solid beat" and he thinks guidance is conservative.
"AMZN reported revenue and EPS 3% and 21% above consensus, and the overall tone of the 2Q print was upbeat. Guidance assumes another quarter of strong revenue growth (6.1% at mid-point) and the OI step down reflects investments ahead of peak capacity in the holiday season. Stepping back from the metrics, Amazon remains arguably the best positioned mega cap tech company measured by its massive TAM and leadership position, and we would add to positions," said Sandler.
Discussing positive, the analyst said, "There were many strong metrics reported in the quarter. AWS revenue was up 58% (5points above consensus) and CSOI margin was up 200bps Q/Q to 30% - AWS continues to be the stand-out performer for AMZN and is driving upside to our price target. On the retail side, unit growth accelerated 100bps to 28% Y/Y, despite a 2 point tougher comp and another 1 point from the leap year impact. NA retail CSOI margin was the highest on recent record, at 6.5%, which drove overall retail CSOI dollars up 82% Y/Y. FCF increased 208% Y/Y, a staggering statistic."
Commenting on negatives, Sandler added, "There were few negatives to point out. The 3Q operating income guidance of $50m-$650m assumes OI dollars grow 40% at the high end vs. the 400% growth rate in 2Q, as AMZN preps additional fulfillment centers for the holiday season and adds content to Prime. Capex was also up 41% Y/Y, a slight uptick, likely related to the FC build out and additional AWS capacity."
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Shares of Amazon.com closed at $752.61 yesterday.