UPDATE: Deutsche Bank Reiterates on Amazon.com Following Pricing Checks
In a report published Monday, Deutsche Bank analyst Mike Baker reiterated a Buy rating on Amazon.com (NASDAQ: AMZN), and raised the price target from $335.00 to $400.00.
In the report, Deutsche Bank noted, “Two favorable developments in this month's pricing checks: 1. First, the gap between BBY and AMZN on TVs narrowed to 2%, the smallest gap in over a year. This development is a crucial step in our long-term thesis as BBY needs to match AMZN on price and stem the tide of share loss, albeit at a lower gross margin. We believe BBY has ample cost cutting opportunities to offset the lower gross margins to drive EPS gains going forward. More competitive pricing, helps to reduce showrooming at the retail level, and combined with more efficient supply chain management (or better in-stock) helps BBY take share online as well. 2. The second, and more incremental, takeaway is that price per inch at both BBY and AMZN was up about 15% y/y. Prices were up 10% y/y in September. While we did not call this out last month, as it was only one data point, the October results are starting to create a trend. With units having hung in relatively better vs price, higher AURs could be a significant comps driver, and gives us confidence to raise our comp assumption for the quarter.”
Amazon.com closed on Friday at $363.39.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.