Why You Should Be Building An Amazon Position During This Pullback

Amazon.com, Inc. AMZN was trading lower by nearly 4 percent Friday, which presents an ideal time for investors to buy the stock.

Deutsche Bank's Ross Sandler argued in a report that now is a perfect time for investors to "selectively add to positions" although investors should understand that the next few quarters could repeat the same story that was told in the third quarter.

Specifically, Sandler stated that Amazon's reported revenue came in 1 percent higher than expected, but the company's earnings per share fell short of his estimates by 10 percent. Nevertheless, there were some positives in the quarter, including Amazon Web Service's revenue which rose 55 percent and CSOI margin rose 170 basis points from the prior quarter to 21.6 percent.

In addition, Amazon's North American retail segment saw strong revenues and North American retail CSOI rose 20 basis points from a year ago despite heavy investments in fulfillment centers and content.

Looking forward, Sandler stated that Amazon's "decision to step on the gas" in groceries, Prime Now facilities and an expansion in India should be positive over the long-term. In addition, the company's transparency and disclosures over its heavy investments should comfort the investment community.

"Shares tend to underperform over the near-term, but each of these phases has presented a great buying opportunity for long-term investors," Sandler wrote.

Finally, Sandler revised its estimates for fiscal 2017 and lowered his EBITDA outlook by nearly 6 percent to $18.637 billion from $19.760 billion. Accordingly, his price target was reduced to $920 from a previous $985 but the Buy rating on the stock remains unchanged.

Elsewhere on the Street, analysts at Wedbush maintained an Outperform rating and $900 price target, while analysts at Credit Suisse maintained an Outperform rating with a price target lowered to $1,000 from a previous $1,050.

RBC Capital Markets' Mark Mahaney said on CNBC that investors should treat Amazon's decline as a "buy on the blip" event.