Amazon (AMZN) Q4 Viewed as 'Strong' - Wells Fargo
Wells Fargo maintained an Outperform rating on Amazon.com (NASDAQ: AMZN) and raised its price target to $417-$440 (from $349-$380). Analyst Matt Nemer views Q4 results as strong.
"All eyes were on Amazon’s Q4 print given the disappointing holiday season, and we think results were strong, all things considered," said Nemer. "In fact we estimate AMZN was responsible for nearly 25% of the dollar growth in U.S. holiday sales this season. Despite a Q4 sales miss, gross profit dollars (the more important metric, in our view) came in almost exactly in-line with our estimate, and grew 32% y/y."
"We estimate AMZN’s GMV grew 5pts higher than sales (25% vs. 20%) generating an incremental $10.5B y/y. We also think GMV growth would have easily surpassed 30% yr/yr ex- the challenge of 6 fewer selling days, weather-related shipping issues and lost sales from a pull back on Prime marketing. In our view, the big news from the call was that Amazon announced they plan to implement a Prime price increase in the range of $20-40 per year. This announcement along with comments on limiting new Prime membership signups during peak periods in Q4 sends a “scarcity” message around the membership program that could be amplified by the media in the coming days (i.e. "get it now, while you can!"). Not to mention the higher price could generate hundreds of millions in high flow through operating profit and possibly signals a profit "check in," he added.
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 $403.01 yesterday, with a 52 week range of $245.75-$406.89.
"All eyes were on Amazon’s Q4 print given the disappointing holiday season, and we think results were strong, all things considered," said Nemer. "In fact we estimate AMZN was responsible for nearly 25% of the dollar growth in U.S. holiday sales this season. Despite a Q4 sales miss, gross profit dollars (the more important metric, in our view) came in almost exactly in-line with our estimate, and grew 32% y/y."
"We estimate AMZN’s GMV grew 5pts higher than sales (25% vs. 20%) generating an incremental $10.5B y/y. We also think GMV growth would have easily surpassed 30% yr/yr ex- the challenge of 6 fewer selling days, weather-related shipping issues and lost sales from a pull back on Prime marketing. In our view, the big news from the call was that Amazon announced they plan to implement a Prime price increase in the range of $20-40 per year. This announcement along with comments on limiting new Prime membership signups during peak periods in Q4 sends a “scarcity” message around the membership program that could be amplified by the media in the coming days (i.e. "get it now, while you can!"). Not to mention the higher price could generate hundreds of millions in high flow through operating profit and possibly signals a profit "check in," he added.
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 $403.01 yesterday, with a 52 week range of $245.75-$406.89.