Market Overview

Why Did Goldman Sachs Add Amazon To Its Conviction Buy List?

Share:
Related AMZN
Netflix Spikes On Takeover Chatter
Holiday Hiring: Jingling All The Way To Your Wallet
World's Biggest Retailers Fighting for a Piece of Indian E-Commerce (GuruFocus)

In a note released early Wednesday morning, Goldman Sachs analyst Heath Terry explained why the firm has added Amazon.com (NASDAQ: AMZN) to its Conviction Buy list, while lowering the price target from $430 to $400.

Terry wrote, "the ongoing investment in fulfillment and infrastructure will widen Amazon's competitive lead through initiatives such as Fresh, AWS, digital media, and faster fulfillment and product availability, driving incremental growth and, ultimately, profitability."

When it comes to Amazon's margins, Terry noted that "context is critical." What he meant was while Amazon's capital expenditures have increased by a multiple of ~10 over the last few years, the company has consistently been among the highest in the internet sector for return on investment capital.

Looking forward, Terry is optimistic about the company's investment into AWS, fresh and hardware based on the high margins those businesses can produce at scale. However, he sees the acceleration of the company's electronics and general merchandise as more representative of the direction of Amazon's core retail business.

Following the release of this note, shares of Amazon have traded up about one percent in the pre-market.

Latest Ratings for AMZN

DateFirmActionFromTo
Sep 2016JMP SecuritiesMaintainsMarket Outperform
Sep 2016Guggenheim SecuritiesInitiates Coverage onBuy
Sep 2016Maxim GroupMaintainsBuy

View More Analyst Ratings for AMZN
View the Latest Analyst Ratings

Posted-In: Goldman Sachs Heath TerryAnalyst Color News Upgrades Analyst Ratings

 

Related Articles (AMZN)

View Comments and Join the Discussion!