Although Amazon reported a $ 57 million (m) net loss for its first quarter ended 31 March 2015, Amazon Web Services (AWS), one of three Amazon.com Inc's business segments that provides data storage and cloud services to big IT companies and start-ups, is still a $ 5 billion (bn) business and growing fast. But can the stock price see more positive action?
The love affair with the stock seems unabated and on Friday the price shot up 14% to $ 445.10 on Nasdaq in New York. In advance of the reported earnings more than a few analysts were thinking that the company's substantial investment in AWS and price reductions would translate into only a marginally profitable business.
At this time last year Amazon's stock was trading at $ 303.83 a pop (25 April 2014) and is up from a 52-week low of $ 284, while five years ago this month it stood at around $ 137.10. Rewind to May 1997 and it was $ 1.73. So, it's been a pretty stellar rise. Two of the attractions for investors, though, are AWS's near 50% revenue growth and Amazon's gross margins of 32% for this latest quarter – a record.
FILE – In this June 16, 2014 file photo, Amazon CEO Jeff Bezos walks on stage for the launch of the new Amazon Fire Phone, in Seattle. Amazon.com reports quarterly financial results on Thursday, Oct. 23, 2014. (AP Photo/Ted S. Warren, File)
The latest quarterly net loss equates to $ 0.12 per diluted share and compares with net income of $ 108m ($ 0.23 per diluted share) in Q1 2014. That said, Amazon's net sales increased 15% to $ 22.72bn for Q1 – versus $ 19.74bn in the corresponding quarter a year ago. Operating income jumped 74% to $ 255m for the latest quarter (Q1 2014: $ 146m). But we are talking about a company with a market capitalization of $ 206.7bn.
In terms of analyst ratings, of 36 brokers monitored by Thomson/First Call the high target for the stock is $ 535 – $ 89.90 (20.19%) higher than Friday's closing price. Investment house JP Morgan upgraded its recommendation on the stock as of 24 April 2015 from 'neutral' to 'outperform' with a price target of $ 535. Meanwhile, Nomura pencilled in a $ 490 price target and analysts at Raymond James upgraded it to 'outperform' from 'market perform' setting a $ 485 target.
Coinciding with Amazon's results, the scale of its plans to become a "conduit" through which all aspects of e-commerce and logistics flow is examined in an industry report ('Amazon Prime Ambition') from global courier firm ParcelHero.
Roger Sumner-Rivers, ParcelHero founder and an industry expert, says: "[The] $ 57m quarterly loss [in Q1] is the price Amazon and its shareholders are willing to pay to transform the market in the future." The report reveals the extent of Amazon's investment and planning for "a revolution in our supply chain, developing its own logistics operations and harnessing the potential of the Internet" according to Sumner-Rivers.
No comments:
Post a Comment