Goldman Sachs Comments on Amazon's (AMZN) Q2 Results
Goldman Sachs maintained a Conviction Buy on Amazon.com (NASDAQ: AMZN) with a price target of $400. The stock was pressured following Q2 results. Analyst Heath P. Terry noted revenue growth accelerated, but investments weighed on margins.
"Amazon reported 2Q revenue of $19.3bn (+23.2% yoy vs. +22.8% in 1Q), in line with consensus. Adjusted operating income margin was 2.1%, slightly ahead of consensus at 2.0% on COGS leverage. FX-neutral revenue growth decelerated to +22% from +23% in 1Q, driven by 22 points of N.A. “Other” deceleration from AWS price cuts, though AWS usage was up 90% yoy. Paid unit growth was flat vs. 1Q at 23%. While 3Q revenue guidance bracketed consensus, margin guidance was below on investment in fulfillment infrastructure and $100mn in incremental spending on original content for Prime Instant Video," said Terry.
"While these margin pressures are clearly testing investor patience, we believe, as they have historically, these investments will generate incrementally higher levels of revenue and operating cash flow growth, ultimately driving share price outperformance," added the analyst.
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Shares of Amazon.com closed at $358.61 yesterday.