Amazon.com, Inc. (NASDAQ:AMZN) continues to “chip away” at brick and mortar retail locations and drive the push toward mobile retail. As a result, analysts at CLSA have increased their price target for the stock slightly and issued analysis explaining the online retail giant’s place in mobile retail.
A Price Target Increase For Amazon
CLSA analysts James Lee and Wei Fang say other retailers are going to have to step up their game, especially in mobile retail and customer service, if they’re going to compete with the powerhouse known as Amazon.com. They maintained their outperform rating on the stock but raised their price target from $290 per share to $300 per share.
Chilton Capital's REIT Composite was up 6.1% last month, compared to the MSCI U.S. REIT Index, which gained 4.4%. Year to date, Chilton is up 6.3% net and 6.5% gross, compared to the index's 8.8% return. The firm met virtually with almost 40 real estate investment trusts last month and released the highlights of those Read More
They based their new price target on 33 times (compared to their previous estimate of 32 times) their 2015 CL non-GAAP earnings per share estimate of $8.71 per share plus normalized cash of $11 per share. Although they see continuing success ahead for Amazon, the analysts also explained five risks they see in investing in Amazon.com, Inc. (NASDAQ:AMZN).
Risks Of Investing In Amazon
First, the analysts noted increasing competition. The businesses which offer products for sale on Amazon Marketplace compete with a variety of different types of retailers, including brick and mortar retail stores as well as online retail outlets. As the retail industry change sand evolves, the analysts said Amazon.com, Inc. (NASDAQ:AMZN)’s ability to attract and keep buyers and sellers may be challenged.
Next, they focused on taxation-related risks. There’s been much debate about sales tax because Amazon doesn’t typically add sales tax on its purchases. Amazon Marketplace Sellers may end up having to pay sales tax or report their sales tax payments, which could have a negative impact on Amazon.
In addition, they note that Amazon.com, Inc. (NASDAQ:AMZN) is expanding rapidly around the globe. The company’s infrastructure and product sourcing are good for business, but they increase the complexity of it and could strain the company’s operational efficiency.
The analysts also said regulators are increasing their scrutiny of Amazon, particularly in relation to the use of information about its users. As Amazon expands into other countries, it’s finding that some of its policies conflict with regulations in these other countries. This makes the market conditions better for local players than for outsiders like Amazon.
And finally, they see risks in terms of litigation because of the legal battles going on in the tablet industry. Apple Inc. (NASDAQ:AAPL) has filed suit against Android tablet makers. As Amazon’s Kindle Fire tablet becomes more popular, it could end up in Apple’s crosshairs next.