Susquehanna Starts Amazon.com (AMZN) at Positive; $900 PT

After the close, Susquehanna initiates coverage on Amazon.com (NASDAQ: AMZN) with a Positive rating and a price target of $900.00.

Analyst Shyam Patil said AMZN is the best way to play e-commerce and cloud growth.

He commented: "AMZN’s e-commerce growth is strong and accelerating (~27% y/y ex FX in 3Q15 vs. 24% y/y in 2Q15 and 20% y/y in 1Q15) and the company continues to take share of a market that’s really only modestly transitioned online, with the bulk of the opportunity ahead. We see continued strong growth going forward with a bias to the upside, especially as AMZN drives further penetration of Prime and FBA as well as expands into new categories (both its own retail selection and third-party) and geographies (such as India and China most recently)."

He added, "Amazon Web Services (AWS) is currently on an ~$8.4 billion (3Q15) annual revenue run-rate yet still posting 78% y/y growth, with continued strong growth ahead. AWS continues to be at the forefront of innovation, as it aggressively rolls out new offerings across the cloud stack (introduced 530 new significant features as of 3Q15, which is already more than the 516 from 2014). Moreover, AWS is ramping its geo expansion and is already in 190 countries; we would note that data sovereignty issues are making specific geo location more important. While pricing could be a concern, volume gains appear to be offsetting even aggressive price cuts. Operating margins of ~25% (3Q15) have also consistently expanded over the past several quarters. It is also important to highlight that AWS margins are ~10x higher than the e-commerce business."

For an analyst ratings summary and ratings history on Amazon.com click here. For more ratings news on Amazon.com click here.

Shares of Amazon.com closed at $581.81 yesterday.

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