Analyst Yanks Target on Amazon
As of Monday, Banc of America Securities analyst Tom Courtney thought Amazon.com should be an $80 stock in a year or so.
As of Tuesday, Courtney canceled that price target--at least, he said, until he sees the online retailer’s second-quarter earnings report, due to be released today.
He also cut his rating on the stock to “buy” from “strong buy.”
If that sounds unusual, it is. Analysts don’t normally change their rating or suspend their price target for a stock the day before the company reports earnings. After all, they’re being paid to have a good handle, in advance, on what that data will show.
“It’s hugely odd,” said Charlotte Chamberlain, a managing director and analyst with Jefferies & Co., a Los Angeles investment bank.
Amazon.com shares slid $1.13, or nearly 3%, to $37.63 on Nasdaq, while the Interactive Week index of 50 major Net-related shares rose 2.2%. Amazon has traded as high as $113 in the last year.
Courtney’s decision came as Amazon.com President and Chief Operating Officer Joseph Galli resigned Tuesday to become chief executive of VerticalNet Inc.
Amazon.com said CEO Jeff Bezos will become president once again. He surrendered the post when Galli was hired 13 months ago from Black & Decker Corp. The two men said the parting was amicable; Galli wants to be closer to his kids, who live in the Philadelphia area.
But Courtney said he was focusing on Amazon.com’s earnings outlook. “Our estimates, which are at the upper end of the Street range, are looking aggressive on both the top and bottom line, and are likely to be reduced,” he said.
“Although we continue to believe Amazon is by far the number one company in this space and believe its long-term model will prove out, it simply cannot afford to miss even the upper end of the range of estimates,” he said.
The implication, of course, is that Courtney believes the earnings news could be bad. “It’s basically saying that he expects Amazon to crash and burn,” Chamberlain said.
Chuck Hill, head of research for earnings-estimate tracker First Call/Thomson Financial in Boston, said that “if he [Courtney] really feels they are going to come up short, it’s legitimate. But you don’t see this every day. And no other analysts followed him. He’s basically out there on his own” in downgrading the stock.
Courtney, whose voicemail said he had been out of the country until Monday, didn’t return phone calls.
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Shares of Amazon.com (ticker symbol: AMZN) fell Tuesday, heading back toward their recent 52-week low, after a Banc of America Securities analyst pulled his price target.
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Tuesday: $37.63, down $1.13
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Source: Bloomberg News
