Benchmark Sees "Meaningful Margin Expansion" for Amazon, Reiterates Buy

In a report published Friday, Benchmark analyst Daniel Kurnos reiterated a Buy rating on Amazon.com Inc. (NASDAQ: AMZN) and raised the price target from $400.00 to $500.00 based on the expectations for meaningful margin expansion over the next few years.On Thursday, Amazon reported fourth quarter and full year 2013 results. The company announced that revenue was up 26% y/y to $25.6 billion, missing estimates by approximately $400 million. Revenue was drastically hit in the EGM segment, highlighting aggressive and competitive big-box electronic discounts.Management announced that first quarter 2014 revenue guidance will likely range from $18.2-$19.9 billion versus consensus estimate of $19.7 billion and Benchmark's $19.6 billion estimate. Operating income guidance was given in a range of -$200 million to +$200 millionBenchmark noted, “Amazon has outpaced the ecommerce market, retailers and even Internet leaders like Google (GOOG-Not Rated) meaningfully. While Amazon's revenue growth rate may moderate somewhat given the challenging economic environment and difficult comparisons, we think Amazon may see meaningful OIBDA margin expansion over the next few years despite ongoing investment to support strong unit volume growth.”Kurnos revised estimates. The analyst expects $19.4 million in revenue, leading to 32% growth in OIBDA at $1.46 million. Kurnos estimates $144 million in operating income and $0.78 in adjusted EPS.Shares of Amazon closed at $403.01 on Thursday, and is currently trading down 9.11% at $366.31.