William Blair Reiterates Outperform Rating on Amazon.com (AMZN)
William Blair analyst Dylan Carden reiterated an Outperform rating on Amazon.com (NASDAQ: AMZN).
The analyst comments "Missing revenue and guiding lower, even modestly, is a tough look in the current market, although we believe it is an increasingly understandable position looking at recent earnings. What is more, we suspect the Street is increasingly looking for more margin upside, much of which should be driven by the North America segment, which instead showed a modest sequential slide. Management reiterated that growing, investing, and improving profitability are not mutually exclusive and remains committed to pulling costs out of the business to improve profit. Meanwhile, much of the slide in the North America segment can be attributed to incremental investment in Kuiper ahead of planned launches later this year. We maintain that mix shift into services and continued improvements in cost to serve (including regionalization and automation) will continue to support profitability in this segment ahead of historical ranges, where the company now appears to be stalling out. The risk is that AWS margin, which is well ahead of historical levels in the mid- to high-30% range, likely gives some if not more considerable margin back, something management acknowledges without suggesting when."
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Shares of Amazon.com closed at $184.07 yesterday.