Analysts have shed some light on e-commerce giant Amazon.com, Inc.(NASDAQ:AMZN), and clothing company Under Armour Inc (NYSE:UA). While Amazon is currently facing competition among other instant streaming providers, Under Armour is competing against mixed reviews from a survey highlighting teenagers’ preferences. Here is a closer look on recent analyst opinions:
Amazon is currently facing competition from Netflix in the arena of instant online streaming. However, due to Amazon’s new subscription options, Wedbush analyst Michael Pachter believes the company is showing determination to expand membership and therefore has a chance against its competitor. In light of this optimism, Pachter reiterates an Outperform rating on the stock, with a $700 12-month price target.
Primarily, Amazon hopes to make some changes to its subscription offerings, namely a standalone video subscription that will be separate from Prime. The new subscription will include a pay-as-you-go option for $8.99 monthly, unlike Prime, which offers an annual subscription for $99. Amazon will also be changing Prime, making a monthly subscription available for $10.99 a month.
The analyst weighs in on these changes, noting, “We expect the standalone video offering to impact Netflix (which reports today) by limiting Netflix’s ability to grow its domestic subscriber base.” Further, Pachter notes, “We also expect the monthly Prime subscription offering to substantially inflate the number of Amazon Prime customers seasonally.” He elaborates, “Regardless, we think that Amazon is determined to drive Prime membership, and expect the monthly subscription option to allow continued growth in Amazon retail sales.”
Additionally, Amazon is expected to start accepting PayPal as a payment processor in the near future. If this happens, the analyst expects AWS Marketplace and its Amazon WAM (WorkSpaces Application Manager) to generate a significant improvement in software and SaaS sales at a very high margin.
Pachter concludes with a hopeful statement, noting, “In order to take a position in Amazon, we believe investors must make a leap of faith that its revenues will continue to grow and that the company will generate high contribution margin.” He expands further, assuring, “We have made the leap of faith on revenues, and we are making the leap of faith that contribution margin from more controlled spending will yield rapid earnings growth.”
According to TipRanks, Pachter has a 43% success rate, and an average loss of -5.4%. Amazon currently has a Strong Buy consensus with 89% of analysts bullish, and 11% of analysts neutral. The average price target for the stock is $750.06 with a 19.84% upside.
Under Armour Inc
Under Armour designs, markets and distributes athletic apparel and footwear, but where does it stand in popularity among teens? Piper Jaffray analyst Erin Murphy shares what she expects from Under Armor proceeding findings from the UA & Teen Survey.
Results for the survey showed mixed views for UA. The company dropped from No.2 to No.3 in preferred athletic apparel brand for upper-income teens, however results proved to be slightly more favorable among average-income teens. Additionally, UA’s Connected Fitness platform dropped from No. 1 down to No. 3, while UA’s women’s products were subject to further deceleration according to the survey.
On April 3, management for Under Armour reiterated its FY16 guidance with an upside of 25% in sales, and a 23% increase in earnings. UA is expected to release Q1 earnings on April 21, but the analyst speculates results will fall below the 150 bps guidance, with EPS cadence at 92% 2H weighted.
Murphy notes an opportunity for slight sales outperformance, noting that her EPS estimate stands at $0.02., and sales estimate at $1,036 million, which falls very close in line with Street consensus of $1,035 million.
This Q1 earnings call for UA will be the first in which the company’s new CFO, Chip Molloy, will fully participate in the discussion. Aside from this factor possibly influencing results, the analyst notes “We will be looking for any changes in the company’s inventory levels” which will be in addition to the accounts receivable for the company.
The analyst reiterated a Neutral rating on the stock, with an average price target of $35.00. Murphey claims, “We remain on the sidelines with respect to UA shares into this week’s Q1 print.”
According to TipRanks, Murphey has a success rate of 35% with an average return of -11.1%. UA currently holds a Moderate Buy consensus, with 73% analysts bullish, 20% neutral, and 7% bearish on the stock. The average price target is $87.11 with an upside of 102.21%.