Amazon.com (AMZN) Stock Gets Price Target Hike at Canaccord Genuity

NEW YORK (TheStreet) -- Canaccord Genuity raised its price target on Amazon.com (AMZN) to $400 from $380 on Monday morning.

The firm's belief that the e-commerce company's web services will be able to drive growth in upcoming quarters is what led to the target increase. Canaccord maintained its "hold" rating on Amazon.com stock.

"Amazon stock has been a dramatic outperformer this year, up 39% YTD versus the S&P up 2%. The primary drivers have been slightly more constructive margin commentary from the company, solid growth even against currency headwinds, and the breakout of AWS as a separate segment," Canaccord said in an analyst note.

Shares of Amazon.com are lower by 0.95% to $425.83 at the start of trading today.

"For now we remain 'hold' rated based on the notion that margin expectations have expanded noticeably over the past two quarters, whereas in general we still believe the company is in investment mode and likely will be until some point in the future when international fulfillment expansion subsides. That said, we do see constructive signals in AWS growth, profitability, and potential valuation," the firm added.

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 solid stock price performance, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, AMZN's share price has jumped by 29.16%, exceeding the performance of the broader market during that same time frame. Although AMZN had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 18.9%. Since the same quarter one year prior, revenues rose by 15.1%. 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 -$1,499.00 million or 40.08% when compared to the same quarter last year. Despite an increase in cash flow, AMAZON.COM INC's average is still marginally south of the industry average growth rate of 40.81%.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 152.8% when compared to the same quarter one year ago, falling from $108.00 million to -$57.00 million.
  • 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

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