Amazon.com (AMZN) Sinks As Results Fall Short of Lofty Expectations

Leading online retailer Amazon.com (Nasdaq: AMZN) is down nearly 8% today following in-line second quarter results after the close, which disappointed investors that were looking for more upside to justify the 70% YTD run-up in the stock.

Amazon.com reported in-line EPS of $0.32 and slightly worse-than-expected revenue of $4.65 billion. Compared to last year, earnings for the quarter fell 10% from $0.37 while sales rose 14%. The company said free cash flow for the trailing twelve months rose 89% to $1.54 billion. Amazon also issued Q3 sales guidance of $4.75-$5.25 billion, which compares to the current Street estimate of $4.92 billion.

A number of analysts put in their two-cents on Amazon.com today, with many agreeing with investors negative tone. In fact, one firm downgraded the shares today following the results.

Collins Stewart downgraded Amazon.com shares from Buy to Hold, saying while they continue to like the Amazon story and view the stock as a core Internet holding, at current levels they do not see material upside. Collins Stewart said while their downgrade was valuation driven, they are also somewhat cautious on Amazon due to the turnaround at eBay's (Nasdaq: EBAY) Marketplace.

Kaufman Bros called the quarter "generally solid" but said the media sales slowdown is "concerning". Kaufman noted North American media sales were flat year-over-year with the company citing weak video game and platform sales. International media sales also softened to 12% year-over-year growth versus 16% last quarter. The firm is maintaining their Hold rating on AMZN.

Analysts at Piper Jaffray were more constructive on Amazon.com, reiterating their Overweight rating and actually raised their price target from $94 to $100. Piper said the slowdown in the pace of North American market share gains was the biggest "eye-opener" but that said, the firm believes Amazon.com's long-term thesis in intact.

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