UPDATE: Bank of America Upgrades Amazon.com; Raises PO

According to a research report published this morning, Bank of America has upgraded Amazon.com

from Neutral to Buy, and raised PO from $235 to $270. Bank of America said in the report, "GAAP EPS beat at $13.2bn/$0.28 vs. Street at $12.9bn/$0.07. The biggest 1Q surprise was gross margin upside to 24.0% vs. our 22.5% estimate, driven by 3rd party mix and AWS. However, 1Q opex grew 54% (above 40% gross profit growth) and employee adds (+73%) and capex spend is unprecedented, so 2012 margins will decline. However, we were too cautious on revenue trends with our earlier downgrade and are more constructive on the stock as 1Q results addressed two concerns: 1) growth seems more stable after two tough quarters; & 2) gross margins are improving despite shipping, content, & Kindle HW pressure." Amazon.com closed yesterday at $195.99.