Amazon’s EGM growth slowsHowever, North America media revenue surged at a better than expected 21% rate to $3.5 billion. Meanwhile, Other revenue which includes Amazon Web Services in North America grew 52% during the quarter. Overall, Amazon.com, Inc. ( AMZN)’s North American business grew 28% to $15.3 billion, missing the consensus estimate of $15.6 billion. International Media business was up 3% to $3.7 billion. Amazon’s International EGM business rose 19% to $4.3 billion. But its growth slowed from 23% in Q3, 2013. Amazon’s first quarter guidance also missed the consensus estimates. FBN Securities analyst Shebly Seyrafi said in a research note that the research firm has lowered ts price target from $500 to $470, mainly due to the EGM weakness. However, Seyrafi maintains an Outperform rating on the stock. FBN said that Amazon.com, Inc. ( AMZN)’s total EGM sales of $17.1 billion were below the consensus of $17.7 billion. But Media business was better than expected, growing 11% to $7.2 billion compared to the Wall Street consensus of $7.1 billion.
Five reasons Amazon is still a solid stockThough weak EGM revenue and downbeat Q1 guidance disappointed investors, the research firm said Amazon.com, Inc. ( AMZN) remains attractive. Here are the five reasons the Seattle-based company still has immense growth potential:
- Amazon Web Services unit continues to grow at above 50% rate, and it’s accretive to the company’s gross margins.
- Amazon.com, Inc. (AMZN)’s media business is picking up. Its North American media business jumped 21% to $3.5 billion.
- The company is planning to increase the Prime membership fees by $20-$40. FBN estimates it could add $400-$800 million to Amazon.com, Inc. (AMZN)’s annual revenues.
- Gross margins continue to improve. During the fourth quarter, the company’s GM rose 240 basis points to 26.5%. AWS is likely to drive gross margins higher.