Amazon.com (AMZN) Stock Trading Lower Today After Ratings Cut
NEW YORK (TheStreet) -- Shares of Amazon.com (AMZN) - Get Report are lower by 0.69% to $377.47 in early market trading Monday, after analysts at SunTrust downgraded the ecommerce giant to "neutral" from "buy" this morning.
The firm noted the near term upside has been captured, and the stock has moved past its target price of $370.
SunTrust added that although the firm remains bullish on Amazon's long-term opportunity and ability to execute, the online retailer may have more difficulty in the future with its free cash flow than many investors realize.
Analysts said, "Amazon's stock has performed well lately, up 25% since fourth quarter earnings, as investor sentiment has overwhelmingly shifted positive more recently on Amazon, focusing on: the impending AWS segment breakout, easier Japan & media comps, and a potential Chinese partnership."
Seattle-based Amazon sells a range of products and services through its various owned and affiliated websites, as well as manufactures electronic devices.
Separately, TheStreet Ratings team rates AMAZON.COM INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMAZON.COM INC (AMZN) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 1.8%. Since the same quarter one year prior, revenues rose by 14.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $6,715.00 million or 20.38% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.38%.
- The debt-to-equity ratio of 1.50 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, AMZN maintains a poor quick ratio of 0.74, which illustrates the inability to avoid short-term cash problems.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet & Catalog Retail industry and the overall market, AMAZON.COM INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: AMZN Ratings Report