Benchmark's Daniel Kurnos Stays Bullish On Amazon, Hikes Price Target To $735

• Shares of Amazon.com, Inc. AMZN have surged 103.38 percent over the past one year, to a high of $693.97 on December 29.
• Benchmark’s Daniel L. Kurnos has maintained a Buy rating on the company, while raising the price target from $700 to $735.
• Following the 10 percent decline in the share price due to the slight miss on revenue and operating income for the holiday, Kurnos believes the pullback offers a buying opportunity.

Analyst Daniel Kurnos explained, “We believe consensus was a bit too aggressive in light of the global backdrop, with our forecast calling for revenue of $35.6 billion and operating income of $1.01 billion, both of which Amazon surpassed.”

Kurnos also expressed surprise at the market reaction to the results, especially given the strong 1Q16 guidance, which should have offset the negative sentiment.

Amazon reported paid unit growth of 26 percent year on year, beating the consensus by 220 bps, with increase in Prime membership of 51 percent year on year for 2015.

Related Link: Is Amazon Really Worth $800?

Looking Forward

“Fulfillment by Amazon (FBA) had one of its best quarters on record, accounting for 50 percent of 3P units and increasing its active seller user base by more than 50 percent, further leveraging Amazon’s fixed costs and helping offset additional distribution/warehousing capabilities,” The Benchmark report said.

Kurnos pointed out that Amazon was still in the early stages of international Prime selection and that the company would be able to become the category leader across several core domestic verticals.

“Going forward, we project Amazon will be able to sustain a 20+ percent y/y consolidated revenue growth rate through 2016, even despite ongoing FX headwinds,” Kurnos added.