, Inc. (AMZN) Battles The Books

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BY Jordan Faigen

Will Amazon (AMZN) customers miss out on thousands of pieces of literature?

Amazon in the News, Inc. (NASDAQ:AMZN) is a go-to-place for many items.  But, before it became the e-commerce powerhouse that it is today, Amazon was originally an online bookstore.

On Wednesday, it was revealed that Amazon and publisher Hachette Book Group are in a dispute over contract terms concerning Amazon’s ability to limit the supply of books from the publisher. Amazon wants to do away with the old publishing system, and allow any person to freely publish his or her work. Whereas, Hachette argues that books cannot be sold just like any other consumer good. The pricing negotiations have been dragging on and Amazon stated that, “despite much work from both sides, we have been unable to reach mutually acceptable agreement on terms.”

Whereas, Inc. (NASDAQ:AMZN) seems to constantly head butt with publishing houses due to their pricing and publishing policies, analysts are keeping track on the company’s record and opportunity of growth.

Financial Experts Weigh In On Amazon

Before this battle was publically announced on Wednesday, Piper Jaffray analyst Gene Munster, was applauding Amazon’s SKU count. Munster reiterated his BUY rating, noting that, “Quarter to date, our weekly tracking of Amazon US SKU count showed on average 21% y/y growth, which was a slight slowdown from the 25% y/y growth we measured in the Mar-14 quarter. As mentioned, we believe that this data points to results roughly in line with our model, which calls for 25% N.A. sales growth vs. 26% N.A. growth in the Dec-13 quarter” and the company’s focus on its Prime service is working in its favor, “Amazon continues to focus on growing Prime item selection with growth being 1% over the past month, 6% over the past three months, and 9% over the past 6 months.” Munster has a +15.5% average return on the stock, helping him earn a +8.3% average return per recommendation with a 63% success rate.

On May 23, Motley Fool contributors Brendan Mathews and Jason Moser also recommended BUY Amazon, noting the opportunity for growth. The two pointed out that, “the company’s got a great opportunity for growth, a brilliant CEO in Jeff Bazos, and plenty of opportunities, like Amazon Web Services.” However, they do point out that the stock is “also risky”. Mathews has a +1.3% average return per recommendation and a 65% success rate of recommendations. Jason Moser has a +17.2% average return per recommendation, with a 76% success rate of recommendations.

Conclusion, Inc. (NASDAQ:AMZN) might be caught up in a tricky battle right now, but financial experts appear to have confidence in the company’s potential for growth and new opportunities.

Jordan Faigen covers financial markets and the latest stock market news. She can be reached at [email protected]

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