Amazon: A Strong Buy - Analyst Blog
On Jan 2, Zacks Investment Research upgraded Amazon.com ( AMZN ), a leading player in the fast-growing e-Commerce market, to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Amazon's Kindle platform remains a major growth platform for Amazon. Amazon has gone on to become a veritable consumer electronics giant from being an Internet retailer initially. The company is making continuous efforts to refresh its line-up of Kindle Fire tablets helping Amazon to gain market share.
Additionally, Amazon announced an exclusive content licensing agreement with the independent film studio - A24 - in an attempt to upgrade its movies and television shows on its streaming video service, Amazon Prime Instant Video. We believe these licensing deals are helping Amazon to strengthen its position versus Netflix ( NFLX ), the leading online video subscription service in the United States.
The Zacks Consensus Estimate for the fourth quarter remained steady at 71 cents over the last 30 days. Also, for fiscal 2013 and 2014, earnings estimate remained steady at 75 cents and $2.50, respectively, over the same time frame.
For the fourth quarter of fiscal 2013, Amazon expects revenues in the range of $23.5 billion-$26.5 billion (up 46.3% sequentially, or 17.5% year over year at the mid-point) and within the Zacks consensus estimate of $26.0 billion. We believe the company's huge investments in the business are beginning to have a positive impact on revenues. Amazon is particularly focused on growing its international business and we expect to see much stronger growth here.
We believe long-term expected earnings growth rate of 28.7%, solid product pipeline, expanding Amazon Web Services (AWS) internationally, content partnerships and strong fourth quarter revenue guidance make Amazon an attractive investment opportunity.
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