Amazon (AMZN) Price Target Trimmed to $420 at RBC Capital on Mixed Quarter
RBC Capital analyst Mark Mahaney lowered his price target on Amazon.com (NASDAQ: AMZN) to $420.00 (from $435.00) following mixed Q3 results but maintained an Outperform rating.
The keys, according to the analyst: Positives: 1) Sustained EGM Revenue Growth – despite modestly tougher comps, an intrinsically healthy result; 2) Impressive Gross Margin – despite lackluster AWS revenue growth…Q3 Gross Margin of 29.7% is likely the company’s highest Q3 ever; 3) Metrics Hung In – 16% Y/Y growth in Active Cust. very consistent; 21% Paid Unit growth was the lowest ever, but a modest 200 bps decel vs. Q3; & 4) Cash Flow Continues To Improve -- $5.71B in TTM OCF is the highest in many years. Negatives: 1) Weak Media Revenue Growth – Q3 marked the 8th consecutive quarter of sub-10% Y/Y Int’l Media revenue growth, and now NA Media growth has started to fade; 2) Anemic Q3 Operating Margin Guide – 0.00002% (ok, it was 0.2%, but the “point” remains…); & 3) Outlook For Probable Sub-20% Revenue growth In Q4…."
The firm's ’14 revenue estimate decreases 3% to $89 billion.
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Shares of Amazon.com closed at $313.18 yesterday.