Amazon drops 9%_ a tale of margins, and of aws – tech trader daily – barrons. com

Shares of Amazon.com ( AMZN) are down $55.92, or 9%, at $579.43, recovering from their worst levels of last night’s after-hours session, after the company reported Q4 revenue below analysts’ expectations, and said on a conference call that its profit had been pressure by increased costs as it took on more of the responsibility for delivering packages, in part because of rising membership in its “ Prime” subscription service.

There are no ratings changes today, just lots of price target cuts, as far as I can see, along with some estimate cuts. High profit selling pdf The Bulls are resolute that investors should look past the shortfall in profit, as having more “ third-party,” or 3P, sales is a good thing, as is having more Prime members.

The bears can grumble about investment, but SunTrust Robinson Humphrey’s Rob Peck, who has a Neutral on the stock, suggests something new, perhaps: The results from Amazon’s cloud computing operations, AWS, now approaching $10 billion in annual revenue, show more starkly the shortfall in profit in the retail business.

He concludes, “With the Prime ‘flywheel’ working, the pendulum may not swing from ‘harvest’ to ‘investment’, but lumpy margins may dampen price appreciation.”

Scott Devitt, Stifel Nicolaus: Reiterates a Buy rating, and a $750 price target.


 “Amazon missed some important estimate or maybe the stock shouldn’t have gone up 9% during the day on 1/28 followed by an 11% decline after hours versus just remaining roughly flat for the day. Items with highest profit margin on ebay Revenue / CSOI for 4Q:15 was toward the high-end of guidance. Low startup cost high profit business Revenue / CSOI guidance for 1Q:16 was roughly in line with our estimates despite incremental negative currency impact. Business ideas with high profit margins The long-term remains unchanged. Highest profit business in india The stock is up 375x since the IPO in 1997 and the company continues doing what it has been doing from the beginning – driving growth and market share to maximize long-term operating profit and free cash flow dollars. Low investment high profit business philippines Should we now start debating whether it is over this time or just buy the dip and move on to more legitimate debates? We think the latter – buy the dip, it won’t last.”

Mark Mahaney, RBC Capital Markets: Reiterates an Outperform rating, and cuts his price target to $715 from $775. High profit business to start “Is There A Problem @ AMZN? We don’t think so. High profit shares in india After 4 quarters of material bottom-line upside, AMZN printed an in-line quarter […] Here’s why we don’t see a fundamental problem: 1.)Revenue was closest (2.7%) to AMZN Q4 Guide high-end in 5 years. Low cost high profit business ideas 2.)Q1 Revenue Guide implies almost no change in Y/Y revenue growth, despite a 4 pt tougher comp. High profit business ideas in india 3.)Unit Growth of 26% Y/Y was highest organic growth in over 2 years. High profit margin business 4.)The cause of the heavier than expected Fulfillment & Shipping expenses was a Good Problem – excess demand – and not structural. High profit small business The # of 3rd party sellers using FBA jumped 50% Y/Y […] The “problem”/“costs” will surely be “fixed”, and in the meantime, AMZN’s customers grow more loyal. High profit crops Hence the robust Q1 Revenue Guide. Business with high profit philippines Make sense? ”

Eric Sheridan, UBS: Reiterates a Buy rating, and cuts his target to $720 from $750. Small investment high profit business india “Amazon’s stock reacted negatively to a break from the past few quarters of sizeable profit beats. List of business with low investment and high profit However, Amazon’s results did demonstrate a continuing momentum on its two most important investment themes: 1) Prime + FBA Flywheel via Prime subs growth (+51% YoY) & seller FBA adoption (~50% of 3P units in Q4); & 2) Continued strong AWS growth (revs +69%, impressive at this scale), along with margin expansion. High profit margin business ideas And while margins (both gross & CSOI) may not have expanded as much as investors had hoped for during the holiday season, both metrics were up YoY despite investments (logistics capacity, sort centers, Prime Now & Same-Day, steaming content, AWS, etc.) & the Q1 CSOI guide was better than recent fears of a return to aggressive investments.”

Neil Doshi, Mizuho: Reiterates a Buy rating and cuts his price target to $685 from $720. Small items with high profit margin “So what’s changed? Amazon is seeing greater third-party FBA-related units flow through, thus requiring more investment in fulfillment. High profit cash crops Ultimately, FBA comes at higher margin than 1P sales, so we believe these investments will drive revenue and margin improvement over time. Small scale business with low investment and high profit We don’t believe this marks another major investment cycle, so we do see CSOI margins continuing to improve.”

James Lee, CLSA: Reiterates an Outperform rating, and a $710 price target. High risk high profit “The modest revenue miss was due to “other revenues” and mix shift to 3P. Business ideas with low investment and high profit in india Other revenues were mostly advertising, which was restructured in 3Q, causing a 50bp drag on the growth rate. High profit business in pakistan 3P unit mix was up 100bps in 4Q15 and revenues are booked based on commissions as opposed to GMV. Best business with high profit As a result, it could cause nearly 85bp drag on growth. Low investment high profit business All together, we believe both contributed to 135bps of drag in growth. High profit items Excluding these impacts, e-commerce revenues beat consensus by 1% (Figure 1). Products with high profit margins We think any concern in slowing growth appears to be premature as Amazon’s revenues grew 23% YoY, on par with Alibaba’s GMV growth in China.”

Stephen Ju, Credit Suisse: Reiterates an Outperform rating, and an $800 price target. High profit low cost business ideas “We are buyers of AMZN shares, as we believe the Street continues to mismodel against the headline CSOI guidance due to: 1) not accounting for capital/financing lease as part of CapEx, which results in 2) undermodeling PP&E assets and D&A expenses, and hence 3) overmodeling CSOI. Low cost high profit items From an EBITDA/FCF dollars perspective Street estimates should be edging higher instead as total CapEx (including capital/financing lease) moderates, in-line with our thesis. Low cost high profit business in india We would hence take advantage of the disconnect in AMZN shares to either initiate/add to positions.”

Daniel Kurnos, The Benchmark Company: Reiterates a Buy rating, and raises his price target to $735 from $700. What products have high profit margins “We believe consensus was a bit too aggressive in light of the global backdrop, with our forecast calling for revenue of $35.6 billion and operating income of $1.01 billion, both of which Amazon surpassed. Small business with low investment and high profit in india More surprisingly, however, given the way eBay (EBAY-Buy) traded after its weak 2016 outlook, we would have thought Amazon’s solid 1Q16 guidance would be more relevant in offsetting the general gloom and doom sentiment. Small business with high profit margin As such, and given that AWS growth is not decelerating as quickly as we anticipated, we would use the pullback as a buying opportunity, with our increased 2016E OIBDA resulting in a new $735 per share price target.”

Heath Terry, Goldman Sachs: Reiterates a Buy rating, and a $760 price target. Companies with high profit margins “We believe this quarter is further evidence that Amazon’s investment in infrastructure, logistics, and web services is accelerating market share gains, cash flow growth, and continued high returns on invested capital as the company generated $11.9bn in operating cash flow and 55% CROCI this year. High profit items to resell While we expect capex and capital lease investments to accelerate this year (see our 1/22 report, “Sizing investment spend and returns through 2020; Remain CL-Buy”) given the company’s high returns we view this as wholly positive, regardless of the near term impact on margins.

James Cakmak, Monness Crespi & Hardt: Reiterates a Neutral rating. Small business with low investment and high profit “We attribute the muted margin expansion to slowing gross profit growth, which decelerated for the first time sequentially since 4Q14, despite the higher mix of 3P/3P-FBA units […] On our Jan 4 downgrade to Neutral (from Buy), we argued a more favorable entry point may present itself to build or initiate positions when estimates recalibrate to better appreciate the scale of investments. Small business high profit in india To be clear, we fully support all of the investments with a long-term horizon, even quests for Oscars. High profit margin Hence, once estimates reflect a more prudent trajectory of revenue and profit growth, we believe a more constructive outlook on the stock can be taken.”

Kerry Rice, Needham & Co.: Reiterates a Hold rating. High profit service business “Amazon reported 4Q15 results slightly below consensus, which did not measure up to the high expectations. Low investment high profit business in delhi While some of the short fall was attributable to FX, we believe the holiday ecommerce trends likely tailed off faster than expected and the revenue mix favored Amazon’s third-party (3P) business. Low cost business ideas with high profit in india The strength of 3P propelled the adoption of Fulfillment by Amazon (FBA), which lifted variable costs above expectations. High profit business in india Consequently, operating income fell below expectations despite the strong growth of high-margin AWS revenue. Low cost high profit Q1 guidance was mixed with revenue upside likely driven by Prime and AWS, but lower than expected operating income as Amazon continues to invest in Prime, as well as ongoing investment in fulfillment, marketing and technology and content.”

Never before has there been such a glum bunch of Apple fans as there were at our meeting at Bud’s place today. Items with high profit margins It seems very clear that our once favorite company is not only down but also out, and out for good. High profit home business There are people in our midst that are ready to kiss Apple and their products goodby and good riddance. Small scale business with high profit in india They are ready to trade their iPhones for Huai’Mi’s and give their Mac’s to the nearest St. High profit online business Vincent De Paul for their 2016 tax write off. High profit products to sell online This in spite of the fact that Apple’s stock has never breached our Chart Wiz Guy’s 50% retracement of $94.77 on a weekly closing basis. High profit industries Apple’s multiple shines on, unlike the Jungle Behemoth.

“I’ d like to introduce a special guest”, she hadn’t even gotten through her intro before something wild happened. Small business with high profit Someone came gyrating in as if from nowhere. High profit farming He hurled himself to the center our small meeting room. Low investment business with high profit Arms flailing, he charging forward and began shouting:

“Hi I’m J.C. High profit selling and I’m Here to Make You Money! I’m so happy to be here as your honored speaker for the people In the Know About Apple. High profit business ideas I can tell you something that I can’t say on my TV show. High profit greenhouse crops It is time to buy, buy, buy Haroooogah, Apple. High profit business in malaysia If I said this on my show and the price of Apple dipped 45 cents people would crucify me because I’m J.C. High profit margin products to sell on ebay But, I can say that here. Low investment business with high profit in india It is time to buy.”

J.C.’s rave continued. High profit margin foods “I was talking to your Chart Wiz Guy. High profit margin products to sell online He is an extraordinary technical analyst… Low investment high profit business in pakistan So what if the S&P goes to 1750 in the next draw down. Business with small investment and high profit I don’t care. Small scale business with high profit The opportunity just might be gone for new buyers of Apple. Low overhead high profit business Apple just might be starting a contra trend which will contrast the down days of the S&P, just as it had done for month after month in the past few years. High profit business ideas india But keep that under your hat.”

“As the host of Mad Money and former floor trader with Goldman Sachs, its been well known for a long time that I can walk on water. Business with low investment and high profit Tim Cook is the CEO of Apple. High profit plants Apple is the most innovative, diversified scaled in synthesized ecosystem of hardware, software, cloud and service revenue streams, which by the way are soon to become rivers. High profit small business ideas 2013 Good lord, the world has never seen such a well run company since the world was made in made in seven days 17,000 years ago.”

“If Tim Cook could walk on water; Do you know what my colleagues on Wall Street would say? They would say, “He doesn’t know how to swim”. High profit margin business india Thats right. High profit online business ideas Tim Cook walks on water because he can’t swim”. Business with low overhead high profit That about sums it up.

Just as fast as he’d appeared, Janie’s friend seemed to disappear. High profit business for sale The mood of the club suddenly became buoyant as common sense, restored once again, became the reversion to the mean.

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