Amazon Still A 'Hold' At Canaccord; AWS Growth Signals Now Constructive

In a report published Monday, Canaccord Genuity analyst Michael Graham maintained a Hold rating on Amazon.com, Inc. (NASDAQ: AMZN), while raising the price target from $380 to $400.Amazon's share price has appreciated 39 percent so far this year, compared to a 2 percent increase in the S&P. The outperformance has been driven by the company's constructive margin commentary, Amazon's robust growth despite currency headwinds and the breakout of AWS as a separate segment.In the report Canaccord Genuity noted, "…we believe the company is still in investment mode, with the recent trend of gross profit growing much faster than revenue likely to moderate slightly and international fulfillment build out still pressuring Commerce margins."Amazon can be divided into five segments: 1P, 3P non-FBA, 3P FBA, AWS and Others. "We estimate that FBA (Fulfillment by Amazon) 3P sales generate a 29% take rate relative to 13% for non-FBA. However, we believe FBA margin is quite a bit lower than that of non-FBA, as we fully load fulfillment expense onto FBA sales," analyst Michael Graham mentioned.The company's AWS segment is expected to generate over $15B in revenue by 2018 and expand operating margin to around 22 percent by then. "We do see constructive signals in AWS growth, profitability, and potential valuation," the report stated.