Argus Research Gives A Hold Rating To Amazon

Amazon stocks are rated as Hold by Joseph F. Bonner who is a reputable Argus Research analyst.

Amazon Inc. recently released its earnings for the 3rd the fiscal year 2015 when the trading ended on October 22, Thursday. Joseph F. Bonner who is a reputable analyst of Argus Research gave the company’s stocks a Hold rating and stated that the stocks are fully valued at the moment. The online retailer’s third quarter ended on September 30 in which the company reported Earnings per Share (EPS) of $0.17. Amazon beat The Street’s estimated by around 30 cents.

The online retail giant also experienced 23 percent year on year increase in its sales which raised the value to $25.4 billion. The company managed to report high numbers despite of the decline by 7% because of the adverse currency movements these days. Gross profit jumped to 44.5 percent whereas the gross margin increased to 34 percent after going up by 500 bps. The company posted
$993 million in Consolidated Segment Operating Income (CSOI) profits, an increase by 3.9 percent.

The Amazon Web Services reported positive results in the September quarter where the sales growth was more than 78% in the third quarter. The Amazon Web Services sales were accountable for 8 percent of the total revenues generated by the company. The retailer posted a jump in its operating income which has increased by 5 times. It posted $98 million in the similar quarter previous year whereas it reported a magnificent increase to $521 million in the current year’s present quarter. Operating margins witnessed an increase of 25%.

Jeff Bezos, the CEO of the company, stated previously that its cloud computing sector is a $5 billion business. As per the analysts, “Amazon is the incumbent leader in the enterprise public cloud space.”

According to a source, Mr. Bonner stated “even though the results are appreciable for now, two quarters of GAAP earnings are not indicative of sustained profitability for Amazon. This is so because the company’s management itself does not count GAAP earnings in its key performance indicators (KPIs).”

He further stated that he does not consider that the company has made changes in its business model however it is constantly increasing and expanding its Prime membership program domestically and also internationally. Amazon is also trying to create and develop a new ecosystem based on the Kindle and Fire devices. The experts consider that the online retailer has a competitive edge over its peers and competitors.

Amazon stock went down by 0.10% to $625.90 at market close on Friday Oct 30.