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Amazon.com, Inc. AMZN shares have surged 96.02 percent over the past one year, reaching a high of $693.97 on December 29.
- Robert S. Peck of SunTrust Robinson Humphrey has maintained a Neutral rating and price target of $625 on the company.
- Peck expects the company to report robust 4Q results. The strong top line growth at Amazon is also expected to continue going forward.
Analyst Robert Peck believes that “Amazon’s strategy is appropriate given e-commerce holds a single-digit market share of retail, Prime adoption is accelerating globally and the flywheel has been gaining momentum, and AWS remains the market leader in a nascent Cloud market.”
However, Peck also expects it to be difficult for the stock to outperform its peers in the near term, despite the recent pullback.
The company has guided to 14-25 percent year on year top line growth for 4Q15, which implies revenues of $33.5-$36.7 billion. Based on channel checks and Amazon’s press releases during the holiday season, the 4Q15 revenue estimate has modestly been raised to $35.6 billion.
“Given our view that the Prime flywheel is gaining momentum, we are raising our margin expectations for 4Q’15 and 2016,” Peck stated.
At the same time, Peck believes that the Street expectations for margin expansion during 2016 might be too optimistic.
With the company currently focused on marketplaces Prime and AWS, Peck believes that although “the pendulum may not swing completely from “harvest” to “investment” mode, margin expansion could be dampened.”
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