Since when is business about sweet nothings and empty promises? At least one analyst asked the question as Wall Street continued its love affair with Amazon.com Thursday, boosting its stock 15 percent after the company said it would curb losses.
Amazon (Nasdaq: AMZN) missed estimates and reported a record fourth-quarter net loss of $323 million on record sales of $676 million Wednesday -- the same old story. But the company promised of profits to come, but didn't get too specific about the when and how part of the equation. The mere mention that the company would try to adhere to common business principles sent the stock flying, and left analysts twittering.
Here's a look at what analysts were saying about Amazon Thursday as its stock rose 10 15/16 to 79 3/4.
"We believe that investors are overlooking Amazon's share of the losses from its equity investments," said Sara Farley at PaineWebber, the only analyst who wasn't smitten with the company's results. She maintained a "neutral" rating on the stock and price target of $74.
"The company isn't hitting the inflection point that people assume," she told ZDII.
"We believe there are some issues to be addressed as to what Amazon as a company is really doing on an operating basis and how that is reflected in its financial statements," she wrote in a report.
"Specifically, the company has been recording its share of losses in equity partners as non-operating expenses. We would argue, however, that these are not necessarily passive investments - because many of the investments were done to acquire revenue streams, they have actually become an integral part of Amazon's operations, and we believe they should be considered by investors when evaluating the company," Farley said.
Amazon may prove a successful e-commerce company, but it faces a formidable task ahead, and is currently at fair value, Farley wrote. The PaineWebber report also questioned the profitability of Amazon's U.S. books business, given that certain "aspects of cost allocation appear to be somewhat subjective and difficult to pinpoint."
Impressed with a few caveats
Farley was clearly in the minority as most analysts were impressed with Amazon's outlook.
Henry Blodget of Merrill Lynch hoisted his near-term rating on the stock from "accumulate" to "buy" with a 12 to 18 month target of $100.
"We continue to believe that Amazon will be the long-term winner in the e-commerce game. Thanks to increased disclosure from management, highly-profitable new partnership deals, and a positive outlook for 2000, we now have greater confidence in the long-term profit potential," he said in a report.
Blodget gave Amazon a grade of B+ for the quarter, despite its earnings miss. It's grade for the outlook: A-.
CIBC also upped Amazon to "buy" from "hold" and raised its price target to $100. Credit Suisse First Boston said it "strongly reiterates" its "buy" recommendation. Bear Stears kept is rating on the stock at "attractive," with a revenue estimate of $2.73 billion.
Banc of America was even more passionate about the possibilities of profit, upping its rating to "strong buy" from "buy."
Reuters contributed to this report.