AMZN upgraded last monday, this monday downgraded. HMMM

Discussion in 'Trading' started by S2007S, Apr 23, 2007.

  1. S2007S


    Amazon downgraded at Piper Jaffray

    By Tomi Kilgore
    Last Update: 10:18 AM ET Apr 23, 2007

    NEW YORK (MarketWatch) -- Amazon (AMZN :, Inc
    News , chart , profile , more
    Last: 44.38-0.57-1.27%
    12:45pm 04/23/2007 AMZN44.38, -0.57, -1.3% ) was downgraded to underperform from market perform at Piper Jaffray, which believes the stock is overvalued, given Wall Street's expectation of margin improvement. The stock was trading down 1.2% at $44.41, but was still well above Analyst Aaron Kessler's price target of $36. Kessler believes the current valuation reflects an anticipation of "significant" margin expansion over the next couple years, but he said that was "unlikely" given Amazon's current growth initiatives and continued high levels of investments. "While there is clear opportunity for Amazon to increase margins longer term as it slows technology and content spending, we do not expect to see much leverage in 2007," Kessler said in a research note.


    Amazon Jumps On Upgrade
    Matthew Kirdahy, 04.16.07, 5:30 PM ET

    Recent spending on technology seems to have been a good investment for one of the original dot.coms. saw its stock jump 6.6% on Monday, gaining in part from a positive review of its capital expenditures meant to lure other companies into using its computers. (nasdaq: AMZN - news - people ) gained $2.79, to $45.20, in heavy trading. During the session it touched $45.27, a 52-week high.

    Analyst Jeetil Patel at Deutsche Bank upgraded the stock to "buy" from "hold," saying the company's heavy spending on technology in the past few years is about to pay off. In a note to investors, Patel wrote, "We believe the potential for operation margin improvement exists in the near term, while the company's Web services initiatives could provide added growth and margin expansion longer term."

    Amazon, said Patel, seems to be "trying to create the operating system of the Internet -- the backbone of infrastructure consisting of hardware, storage systems and algorithms that collectively create a grid computing model that can be used by others on a per-usage basis." These Web services, which have monthly fees of as little as $3 a month -- before usage charges are added -- allow Amazon to sell its computing assets to other companies at a price low enough to make them attractive.

    Because much of the investment in extra capacity has already been made, Patel said, revenue contributions from Web services should largely go to the company's bottom line.

    Patel also raised his price target to $50 from $37.

    The Seattle-based Amazon, with $10.7 billion in 2006 sales and net income of $190 million, has hiked technology investments by $150 million to $200 million a year for the past three years, said Patel. This year, the analyst expects spending of a little more than $600 million, representing an increase of about $80 million.
  2. One of them is an analyst, the other is probably an ET member, who's who? :p
  3. I'm sick of all these asshole analysts.

    I'm convinced that they're wrong 80% of the time or more, and more importantly, that they have ulterior motives for the shit they propagate.
  4. AMZN looks like a great short position before earnings. I see this at $40 by Friday.
  5. 2 different analysts at 2 different firms.

    What's the problem? There's usually a difference of opinions among analysts and among firms.
  6. I know, but I'm in a bad mood today.
  7. It's funny how when analysts predict earnings, they predict earnings excluding any potential one time losses, options expenses, etc. To be objective, why don't they also say excluding one time beneficial tax rate or currency exchange rate changes. Don't hear that much eh?

    But, when companies beat based on that unknown -- not surprise revenue or normal earnings metrics improvement -- the analysts cheer about how great the earnings surprise was. And the stock soars.
  8. "Piper Jaffray upgraded Internet retailer, Inc. to market perform from underperform, citing solid first-quarter results driven by improved gross margin and a lower tax rate. Piper on Monday had downgraded the stock to underperform. In hindsight, the broker said that Amazon's new tax guidance of 23% is significantly lower than previous guidance of "below 35%" and the company's original 2007 guidance given in February implied much lower operating-margin levels"

  9. pamjoey


    Guess the downgrade was wrong here LOL ::D

    I guess missing the target by 20 pts, not to bad. Hehehehe