Amazon.com, Inc. (NASDAQ:AMZN) reported mixed first quarter results on Thursday, with solid revenues but weak earnings. That sent the stock down by more than 9% on Friday. The online retailer said its revenues soared 22.7% to $19.74 billion, easing past the consensus estimate of $19.42 billion. This shows the company’s strength in the retail business. However, non-GAAP operating income of $502 million missed the consensus estimate of $525 million. Amazon had forecast Q1 non-GAAP income of $150-$550 million.

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Amazon’s operating margins declined by 20bp

Raymond James analysts Aaron Kessler and Ben Cohen expressed concerns over slowing unit growth and media sales, lower than expected operating margins and continued heavy investments. The research firm has lowered its price target on the stock from $443 to $391. Raymond James also downgraded the stock from Strong Buy to Outperform.

Amazon.com, Inc. (NASDAQ:AMZN) said its U.S. revenues grew 28% during the quarter, while international revenues went up by 26%. However, the Seattle-based company’s operating margins skidded by 20 basis points, and missed Raymond James’ estimate by 40 basis points. Media growth in the U.S. as well as international markets was below the research firm’s estimates. Most concerning was the fact that unit growth plummeted 23% YoY while investors were expecting it to accelerate during the quarter.

Amazon’s Q2 operating income guidance below the consensus estimate

Amazon.com, Inc. (NASDAQ:AMZN) reported gross margins of 28.8%. Gross profits increased 33% to $5.686 billion, surpassing the consensus estimate of $5.42 billion. The company reported GAAP earnings of 23 cents, missing Raymond James’ estimate of 27 cents. For the current quarter, the online retail giant expects revenues of $18.1-$19.8 billion compared to a Wall Street consensus of $19.1 billion. However, its non-GAAP operating income guidance of $0-$400 million is far below the consensus estimate of $560 million.

After the report, Raymond James increased its 2014 revenue estimate by 0.8% and 2015 estimate by 0.9%. The analysts reduced their non-GAAP operating income forecast for Amazon.com, Inc. (NASDAQ:AMZN) by 20.5% for 2014 and 20.8% for 2015.

Amazon Raymond James Estimates-2

The analysts lowered the operating income estimate mainly due to weak Q2 income guidance and significantly higher operating expenses. Using a sum-of-the-parts analysis, Raymond James values Amazon at $391 per share.

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Amazon.com, Inc. (NASDAQ:AMZN) shares were down 8.76% to $307.60 as of 12:21 PM EDT on Friday.