AMZN Converting Rising Traffic into Revenues
Analysts at Goldman Sachs maintain their “buy” rating for Amazon.com Inc (NASDAQ: AMZN), while raising their estimates for the company. The six-month target price has been raised from $125 to $146.
Traffic at AMZN is being driven by the newsflow related to the ongoing online pricing war, new wireless e-readers and the launch of high-profile software and music. Goldman Sachs said that with AMZN’s broad product range and rebates, the company is able to convert traffic into revenues. AMZN’s operating margins can be expanded even through higher revenues from lower gross margin products as the company scales its operating expenses.
According to Goldman Sachs, Amazon.com’s pricing competitiveness is highlighted by limited price skirmish faced by the company from high-profile retailers such as Walmart.com in the US and TheToyShop.com. Goldman Sachs raised its EPS estimates for 2009, 2010 and 2011 to $2.62, $3.28 and $4.19.
Similarly, analysts at UBS reiterate their “buy” rating for Amazon.com Inc (NASDAQ: AMZN).
UBS said that comScore reports indicated that the US eCommerce sales for the first 3 weeks of November grew by 2% y/y, marking an improvement from the -1% Y/Y growth seen in Oct. Comscore’s forecast for the ’09 holiday shopping season suggested further acceleration in US eCommerce sales growth in the remaining Q4. Comscore’s forecasts compares to UBS’ Q4 estimates of +29% Y/Y growth estimate for AMZN in North America.
