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Goldman Puts More Kindling On The Fire, Cuts Amazon Price Target To $182

Tyler Durden's picture





 

Goldman not happy with with the fact that contrary to market expectations, the Amazon negative margin retail caterpillar keeps on refusing to transform into a beautiful apple. To wit: "Amazon reported 4Q11 results after the close. Despite upside to EPS versus consensus and consolidated segment operating income which came in materially above the Street, in our view the focus will be on the shortfall in revenue, which came in at $17.4bn versus consensus of $18.3bn. In fact, the 4Q2011 quarter marks the second consecutive quarter that Amazon has fallen short of the consensus revenue forecast. Along with a slowdown in growth in video games and consoles and an impact on certain sales due to the floods in Thailand, management also referenced the macro environment as a cause for the miss, with weakness in Europe called out in particular. As for its Kindle and Kindle Fire performance in 4Q2011, we estimate sales hit 10.6mn, below our forecast of 13.9mn units. That said, we believe the company hit our more important Kindle Fire unit forecast of 6mn, suggesting the Fire cannibalized sales of traditional e-readers. As for guidance, Amazon gave an outlook below consensus on all major metrics; revenue, GAAP  operating income, and CSOI. As such, we are lowering our revenue forecast for the year by roughly $2bn to $63.6bn versus the Street prior to last night at  $65.3bn, and our GAAP operating margin is being reduced to 0.3% for CY2012, versus consensus of 1.8%. On lower expected sales and higher expenses we are reducing our 2012/2013 GAAP EPS by 75%/40% to $0.36/$2.11 from $1.42/$3.57 versus consensus of $1.88/$3.75 prior to the call. On lower expected earnings we are reducing our 12-month price target to $182 from $190. At around $177 in the after market, Amazon is trading at 29X our 2012 non-GAAP EBITDA estimate of $2.57bn. Our price target is based on our equally weighted DCF, P/E, and EV/EBITDA analysis." Time for Amazon to make up for ever lower margins with even higher volume. Or something.

 

 


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Wed, 02/01/2012 - 08:42 | Link to Comment Everybodys All ...
Everybodys All American's picture

Amazon clearly has not figured out that they need to use Chinese (Foxconn) slave labor.

Wed, 02/01/2012 - 09:02 | Link to Comment Zero Govt
Zero Govt's picture

You sure about that?

GM and GE are moving production to China too, where's the 'success' with those two insolvent dinosaurs

Wed, 02/01/2012 - 08:42 | Link to Comment Benedict Farse
Benedict Farse's picture

EBITDA-DI-DA-DI-DA-DI-DA. BULLISH.

Wed, 02/01/2012 - 10:21 | Link to Comment Hansel
Hansel's picture

Golden Fucknut has a $182 price target and is predicting $.36 cents a share in 2012?  505x earnings, are they fucking serious?  And fuck 'non-GAAP.'  Cherry picking dipshits.

Wed, 02/01/2012 - 08:43 | Link to Comment s2man
s2man's picture

Time for me to win the Lottery. Or something.

Wed, 02/01/2012 - 08:45 | Link to Comment Oh regional Indian
Oh regional Indian's picture

" Along with a slowdown in growth in video games and consoles"

That is quite a tell. Having run a Mobile Gaming/VAS company for 4 years, one Mantra we got from EVERYONE was games do well in a down-turn because people just stay home.

And Deja Vu. Sitting in my office in 1998ish, discussing with friends if this new company sellng books on line, listed at a dollar something, was really a worth-while investment. 

Like-wise APPL at 12$ in 1999. Funny.

Amazon will survive far better/beyond bricks retailing though. Perhaps it's the next AAPL/GOOG? Again I mean.

ori

 

/are-we-all-so-fast-asleep/


Wed, 02/01/2012 - 09:34 | Link to Comment CrazyCooter
CrazyCooter's picture

You forgot to mention Digital Convergence Corp among many, many others ...

http://en.wikipedia.org/wiki/CueCat

To look back at 1998 and select one or two stocks as representative of anything is sideways at best as almost all of the old internet companies are defunct.

I agree Amazon will be around for a long time to come. They have a business model, they make money. I still think Apple is crazy over valued. Google will own the future of data infrastructure, but again I think they are overvalued now as well.

But, I don't trade stocks, I am just a professional computer geek. I may very well be completely wrong on Google ... Apple, not so much ...

Regards,

Cooter

Wed, 02/01/2012 - 08:52 | Link to Comment Robslob
Robslob's picture

Maybe because I got a Kindle Fire " on sale" for $50 when I was purchasing a WiFi device...oh yea, they gave me the $269 WiFi device for free as well...when does Best Buy report...I am sure they will knock it out of the park...or maybe they already did...

Wed, 02/01/2012 - 08:59 | Link to Comment Zero Govt
Zero Govt's picture

it's a topping process

the Facebook IPO is one, Amazon dropping is two and the Deutsche Bourse buying the NYSE is three (a deal blocked by Eurocrats, obviously not enough brown envelopes yet for the Marxists!)

Give it 2 weeks to 2 months is the usual timing for tops.. then short

Wed, 02/01/2012 - 09:11 | Link to Comment resurger
resurger's picture

Wait for Facebook's IPO & QE3 then short Zero.

If Europe will print 1 trillion, fuck it, lets counter balance this shit and we might as well print another 1 Trillion! WHO GIVES A FUCK!

Ill go buy more silver & gold

out!

Wed, 02/01/2012 - 10:14 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

 just b/c accounting can make a silk purse outa a sow's ear, here, there isn't a heluva lot anybody can do about that top line, is there?

let's do a little slewie math:

expected:  $18.3B  (consensus)

print:          -17.4B  (actual)

diff =               .9B$

.9/18.3 = 5%  sales & revenue shortfall  (.0491)

that's a pretty sizeable miss for the holiday and gift-giving quarter, imo.  disclosure:  i don't study or follow this company, except here, but wasn't the problem in earlier reports that they were giving away the store with shipping expenses to build that top line? 

w/ the price @ $177, goldman cuts the expected price "target" to $182 from $190

with the obvious calendar/fiscal year tomfoolery, the squid lowers its EPS by 40% and "predicts" a new "target price" $8 lower (4.2% of the original $190 estimate)

so, as we head into this year, with declining sales ('possible' recession), strong kindleFire competition, and declining marging, it appears to slewie that they are "predicting" a nice up-ramp in the PE ratio, even going so far as to explain their "= weighing"  of PE w/ DCF (discounted cash flow) and ev/ebitda ratio

L0L!!!  it seems that goldman knows the company is worth this, because it is! 

i'm a little less "accepting" of their business model than the others here, b/c

  • the stuff they sell is relatively heavy, compared to price (revenue) so the shipping/sale ratio is too high, and it appears to me they have 'modeled' themselves into a bind, here, and has since i (perhaps erroneously) saw the shipping eating them alive.  compare selling goldilocks&da3bearz to selling gold to 3 billion bears, and you might see my point.  who wants to pay (or eat) $8 S&H on a $20 purchase (or sale)? 
  • this is why, imo, they are not doing well and as g/Sachs correctly sees, they look like poo-poo going forward, too
  • they still gotta have a brick&mortar office or three "somewhere"

that said, ORI's comment (here, not somewhere else) are certainly not irrelevant & slewie gave him a greenie for 2 reasons!

Wed, 02/01/2012 - 11:52 | Link to Comment Omen IV
Omen IV's picture

what happens to their model  - if sales / use tax are collected in all states via potential new federal law reversing the existing law put in place in the early 90's?

do they subsidize both the shipping and the sales tax?

and is amazon trying to knock off Barnes & Noble  - much quicker now  - so when the sales tax is reversed they can both raise prices with impunity and hammer the publishers?

Wed, 02/01/2012 - 10:06 | Link to Comment kito
kito's picture

so goldman cuts price target, which means we raise it..........

Wed, 02/01/2012 - 10:52 | Link to Comment chindit13
chindit13's picture

Can anyone confirm this bulletin from either Bloomberg or The Onion:

Amazon renames Kindle the iPad 4;  stock goes parabolic despite earnings miss.

Wed, 02/01/2012 - 11:12 | Link to Comment Cone of Uncertainty
Cone of Uncertainty's picture

I could live with the trifecta investment cycle and its short term impact on margins and EPS--fullfillment centers, studio content, kindle fire development costs--while revenue growth was robust, but what the fuck, now media growth in the US is only growing 8% YoY?

WTF Bezos, I want some fucking answers you prick!!

I would now like to see the law of large numbers start working on the expense line.

Wed, 02/01/2012 - 11:36 | Link to Comment El Gordo
El Gordo's picture

I've been out of stocks for quite a while now.  Does this mean I should dump a load of cash into Amazon?

Wed, 02/01/2012 - 12:01 | Link to Comment Bam_Man
Bam_Man's picture

Hilarious.

The only way they can come up with a multiple for AMZN that is not well into triple digits is to use Non-GAAP EBITDA.

Next quarter they will have to invent a new metric that excludes even more expense categories from the denominator.

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