Published January 31, 2014
Wall Street sent shares of Amazon.com (AMZN) sliding 8% Friday morning after the e-commerce giant revealed holiday season results that badly missed the mark.
The earnings dud from the largest online retailer late Thursday triggered a mixed reaction from the analyst community.
Cantor Fitzgerald kept a “buy” rating on Amazon’s shares, but trimmed its price target to $415 from $425, leaving little upside from its Thursday close at $403.01. Still, the commentary from the firm was largely positive.
“Amid signs of slowdown in U.S. e-commerce, Amazon continues to grow materially faster than the overall market, as it benefits from strong demand, driven by a superior consumer value proposition” and a “robust” Amazon Web Services offering, Cantor analyst Youssef Squali wrote in a note to clients.
Amazon’s fourth-quarter EPS of 51 cents was not even close to the Street’s view of 66 cents, while the 20% jump in revenue to $25.59 billion came up shy against consensus calls for $26.06 billion.
Goldman Sachs (GS) maintained its “buy” rating on Amazon and was one of several firms that raised its price targets on the company’s shares. Goldman now has a 12-month price target of $460, up from $450 previously.
“While growth slowed this quarter, we continue to believe the value being created by Amazon’s innovation in retail and the cloud should continue to drive stock price outperformance, particularly as the company leverages ongoing infrastructure investments into faster growth and higher returns,” Goldman analyst Heath Terry wrote in a note to clients.
Terry noted that favorable investments include ones in distribution and data center infrastructure around the world, the Kindle device, digital media offerings, and in China and other emerging markets.
During a conference call with analysts Thursday evening, Amazon execs hinted at hiking the price of its two-day “Prime” membership program by 50% to help counter shipping and fuel costs. Such a move would be the first price hike in the popular program’s history.
Squali said a potential price increase “should contribute to higher profitability and/or further investments to re-accelerate top line growth.”
Shares of Seattle-based Amazon.com fell 8.13% to $370.06 Friday morning.