Stephen Ju of Credit Suisse rates stocks in the internet sector and is ranked in the top 5% globally by TipRanks. Today, Ju raised his price targets for e-commerce leader Amazon.com, Inc. (NASDAQ:AMZN) and online travel giant Expedia Inc (NASDAQ:EXPE), following solid earnings announcements. Below are the price target changes along with current ratings and comments.
Stephen Ju weighed in on Amazon after the company reported better-than-expected first quarter results, with revenue of $29.1 billion, +29% x-FX above his estimate. As such, the analyst raised his price target by 10%, from $800 to $880, while reiterating an Outperform rating on the stock.
Ju wrote, “A confluence of increasing selection, Prime adoption, and Leap Day helped Amazon accelerate EGM revenue globally despite tougher comps. AWS grew 64% YOY versus 69% in 4Q15. The pace of its core e-commerce gross margin expansion picked up once again, and this along with AWS contribution helped to drive gross profit dollars 9% beyond our estimate. And with OpEx largely in-line CSOI at $1.7b exceeded consensus expectations while aggregate CapEx at $2.4b fell short of our $2.7b estimate.”
“We maintain our Outperform rating and our thesis remains: 1) As our AWS DCF valuation stands at $162b, this implies the Street is mispricing Amazon’s e-commerce franchise, 2) FCF should reset higher as capital intensity to run AWS is starting to level off with usage growth now below 100% and, 3) E-commerce segment operating margin expansion as shipping losses stabilize,” the analyst concluded.
Out of the 30 analysts polled by TipRanks in the past 3 months, 27 rate Amazon stock a Buy, while 3 rate the stock a Hold. With a return potential of 19%, the stock’s consensus target price stands at $788.11
Expedia shares are up 7% after the company released first-quarter results that were above Street expectations on both top and bottom lines. As a result, Stephen Ju slightly raised his price target from $130 to $134, while keeping his rating for the stock at Neutral.
Ju wrote, “Expedia delivered 1Q16 outperformance across the board with total gross bookings and revenue margin both ahead of CS expectations. One highlight of the quarter was Trivago which accelerated revenue growth to 48% YOY on a tougher comp. Our estimates in the near term remain largely unchanged, but as we contemplate higher Trivago contribution with a higher margin profile, our longer-term FCF estimates increase.”
“Going forward, we continue to monitor the potential shareholder value unlocking event at HomeAway as it transitions into a real-time commission based marketplace and starts to exert a greater impact on Expedia’s PnL. We maintain our Neutral rating for now primarily on valuation,” the analyst concluded.
According to TipRanks’ statistics, out of the 14 analysts who have rated Expedia in the past 3 months, 9 are bullish, 4 remain on the sidelines, while 1 is bearish. The average 12-month price target for the stock is $136.33, marking an 18% upside from current levels.