This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Can Amazon Remain Immune to Mother Nature?

Amazon Web Services (AWS) likely helped results during the quarter substantially, given that Amazon's cloud computing engine has successfully become part of the infrastructure on which much of the Internet is built. Goldman's Terry believes AWS "revenue growth continued to accelerate into 1Q pushing North American other revenue +53% in 1Q vs. 52% in 4Q." On a sum-of-the-parts basis, Terry believes AWS is worth $37 billion of Amazon's roughly $220 billion market cap, making it an invaluable piece to the Seattle-based company.

Much is always made about Amazon's razor thin operating margins, and that's not expected to change any time, as Amazon continues to reinvest profits into new initiatives, like the recently announced Fire TV, or the just-announced deal with Time Warner's (TWX) HBO to bring certain HBO content to Amazon Prime.
Cantor Fitzgerald analyst Youssef Squali is expecting the first-quarter operating margin will be 0.5%, down 60 basis points year-over-year, as Amazon continues to invest in the business. "While we expect 2014 operating margins to remain under pressure from continued focus on investments (more fulfillment centers, expansion of Amazon Fresh, growing video content, etc.) as well as recent price cuts on AWS, this should be partly offset by the $20 hike to Prime membership fee," Squali wrote in the note. "For 2Q:14, current consensus stands at $19.02B (+21.1% Y/Y) for revenue and 1.1% for GAAP operating margin (+60bps Y/Y)." He rates shares "buy" with a $415 price target.

Amazon has been exceptionally busy in recent weeks, launching several new initiatives that were not included in the first-quarter, so Wall Street will be looking to see if Amazon provides any guidance on these launches.

Though the Fire TV was launched earlier this month, it looks as if it's already off to a great start, as the second most popular item in Electronics, behind Google's Chromecast on Amazon among streaming devices, with Apple TV coming in seventh.

Must Read: Amazon Unveils Prime Pantry Online Grocery Store

Following the HBO announcement, Wedbush Securities analyst Michael Pachter noted this could make Amazon Prime more appealing than Netflix (NFLX), given the breadth and scope of the deal. "We believe the HBO deal positions Prime Instant Video as a viable competitor and potentially more appealing alternative to Netflix," Pachter wrote in a note to clients following the announcement. "Through the HBO deal, in addition to its own original content, Amazon has the potential to offer close to seventy different series that we believe HBO owns outright, with multiple seasons available for the more successful shows. In comparison, we believe that Netflix's original series figure is closer to ten, with up to only two seasons available."

Pachter, who rates Amazon shares "neutral" with a $330 price target, is expecting Amazon to earn 17 cents a share on $19.52 billion in revenue.

Wednesday, Amazon unveiled Prime Pantry Online, which Amazon describes as a place to take advantage of "Low-priced essentials in everyday sizes, delivered to your home."

-- Written by Chris Ciaccia in New York

>Contact by Email.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AMZN $679.06 2.15%
GOOG $767.04 3.29%
AAPL $117.34 -0.81%
FB $107.12 2.76%
TSLA $237.19 3.01%


Chart of I:DJI
DOW 17,888.35 +168.43 0.95%
S&P 500 2,102.63 +22.22 1.07%
NASDAQ 5,156.3060 +47.64 0.93%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs