Wedbush Maintains Neutral Rating On Amazon; Prefers To Stay On The Sidelines
In a research note issued today, Wedbush analyst Michael Pachter maintained coverage with a “Neutral” rating on Amazon.com Inc. (AMZN), and a price target of $330.00 a share following the news that Amazon’s Fire, the company’s first entry into the smartphone market, will be released in July.
The analyst noted, “While recent announcements have given us increased visibility into Amazon’s revenue growth, we are not convinced that the company will share sufficient details about spending plans to allow us to accurately model profit growth, and it may take time before EPS grows sufficiently to justify its share price.
Amazon is a dominant online retailer well on its way to becoming one of the world’s largest retailers, in our view. We believe the company enjoys considerable advantages over its brick-and-mortar competitors, due to its low direct overhead. Amazon management is quite ambitious, expanding into expensive digital media through its Kindle and Fire TV hardware and its Prime Instant video streaming, depressing the company’s earnings power. Similarly, the expansion of Amazon Web Services has thus far been quite costly, although we think that AWS is at a tipping point and will generate significant leverage going forward. 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 will generate high contribution margin; we have made the leap of faith on revenues, but the lack of visibility on contribution margin gives us pause, and we prefer to stay on the sidelines”.
According to TipRanks, which measures analysts and bloggers success rate based on how their calls perform, analyst Michael Pachter currently has a one-year average return of -2.1% and a 48% success rate. He is ranked #2872 out of 3115 analysts.