Earnings Review: Wedbush Shines Light on Amazon.com, Inc. (AMZN) and Pandora Media Inc (P)


Wedbush analyst Michael Pachter came out today with a few insights on the online shopping giant Amazon.com, Inc. (NASDAQ:AMZN) and internet radio giant Pandora Media Inc (NYSE:P), as both companies released their third-quarter earnings results yesterday evening.

Amazon.com, Inc.

Amazon shares have taken off, adding 9.77% to trade at $619, as the company’s third-quarter results exceeded expectations soundly. It was particularly impressive that every revenue growth line accelerated this quarter.

In reaction, Pachter reiterated an Outperform rating on Amazon shares, with a price target of $700, which implies an upside of 24% from current levels.

Pachter noted, “Profits impress again, exceeding the high-end of guidance and consensus. Revenue was $25.4 billion vs. our estimate of $25.5 billion, consensus of $24.9 billion, and guidance of $23.3 – 25.5 billion. Operating income was $406 million vs. our estimate of $70 million and guidance for $(480) – 70 million. GAAP EPS was $0.17 vs. our estimate of $0.02 and consensus of $(0.13).”

“We are maintaining our FY:15 revenue estimate of $1 07 billion, while raising our EPS estimate to $2.15 from $1.36 to reflect Q3 results and Q4 guidance. We are maintaining our FY:16 estimate for revenue of $124 billion while raising our estimate for EPS to $3.50 from $2.80 reflecting greater operating leverage,” the analyst added.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Pachter has a total average return of 0.2% and a 47.0% success rate. Pachter has a 5.2% average return when recommending AMZN, and is ranked #2235 out of 3801 analysts.

Out of the 30 analysts polled by TipRanks in the last 3 months, 27 rate Amazon stock a Buy, while 3 rate the stock a Hold. With a return potential of 14.77%, the stock’s consensus target price stands at $647.21.

Pandora Media Inc

Pandora shares are tumbling 32% in pre-market trading, as the company’s third-quarter results and guidance contained several weak points. While the Q3 results were mixed, the Q4 outlook was weaker than expected in part due to increased competition in the space from the likes of Apple and Spotify.

Pachter commented: “Q3 results were below our expectations as competitive services lured listeners away with free trials. Revenue was $312 million vs. our estimate of $315 million, consensus of $313 million, and guidance of $310 – 315 million. Adjusted EBITDA was $31 million vs. our estimate of $32 million, consensus of $29 million, and guidance of $25 – 30 million. Non-GAAP EPS was $0.10 vs. our estimate of $0.12 and consensus of $0.10. Listener hours were up 3% despite intense competition in the quarter from the June launch of Apple Music. Perhaps more importantly, management lowered full year revenue guidance.”

However, “We expect Pandora users to grow once competitors cycle through trials, and we think it appropriate to value the company based on its number of users. Despite our lowered estimates, we continue to favor Pandora’s competitive position and its potential.”

The analyst reiterated an Outperform rating on Pandora shares, with a price target of $26, which implies an upside of 35.5% from current levels. According to TipRanks.com, Pachter has a 1.7% average return when recommending Pandora.

Out of the 31 analysts polled by TipRanks in the last 3 months, 12 rate Pandora stock a Buy, 4 rate the stock a Hold and 1 recommends a Sell. With a return potential of 25.48%, the stock’s consensus target price stands at $24.08.