Cowen Trims PT on Amazon (AMZN) to $390; Maintains at 'Outperform' Post-Q2 Results
Cowen and Company lowers its price target on Amazon.com (Nasdaq: AMZN) from $410 to $390 and maintains an Outperform rating on the stock following Q2 results released Thursday night.
Analyst John Blackledge commented that Amazon delivered a mixed report with units stabilizing and a topline result and guide that met expectations, but the profitability disappointed. Also, AWS price cuts put an unexpected dent in growth.
Key items observed in the quarter:
- Unit growth remained steady at 23% y/y in 2Q, flat with 1Q and above our 22% est.;
- CFO Skutak said AWS volume growth was strong at 90% y/y but also stated that price cuts has a larger impact on revenue;
- The int'l segment posted a loss of $34MM, better than our $180MM loss estimate; additionally, while comments suggest China remains an area of investment and Japan saw the impact of a new consumption tax, the results suggest improvement in other regions; and
- Finally, we counted 5 areas of investment for 3Q14 guide i) 6 net new FCs; ii) 7-8 additional sorting facilities (smaller distribution centers at 300K sq ft for last mile delivery); iii) $100MM in original video content to be spent in 3Q; iv) further geo expansion in China / India; and v) AWS infrastructure and personnel.
Amazon.com closed at $358.61 yesterday.