Kessler believes the company still has "revenue momentum with accelerating growth in the U.S.," particularly since the company noted "millions of new prime subscribers" were added last quarter; strong [Amazon Web Services] growth of approximately 77% this year and an expectation of improving margins next year and beyond from larger more automated warehouses and improving international margins, he wrote in a note on Friday.
"Ultimately we believe long-term non-GAAP operating margins can reach [approximately] 10%," the note said. "We believe shares offer an attractive risk/reward at current levels."
Amazon reported late Thursday a third-quarter loss of 9 cents a share on $17.09 billion in revenue, up 24% year over year. Consensus estimates had expected Amazon to post 9-cent loss on softer revenue, averaging at $16.76 billion, according to Thomson Reuters.
Shares were surging 7.9% to $358.62 at last check on volume of 8.3 million shares, more than triple its average daily trading volume.
-- Written by Laurie Kulikowski in New York.
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