Why Amazon.com, Inc. Slipped This Morning
While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of Amazon.com slipped 1.5% this morning after UBS downgraded the Internet retail gorilla from buy to neutral.
So what: Along with the downgrade, analyst Eric Sheridan lowered his price target to $375 (from $450), representing about 4% worth of upside to yesterday's close. While contrarians might be attracted to the stock's late-January pullback, Sheridan thinks that Amazon's appreciation prospects remain limited given the surprisingly negative results of its recent consumer survey.
Now what: According to UBS, Amazon's risk/reward trade-off is pretty unattractive at this point. "Our survey results call into question our prior views about the value that a broad set of consumers are applying to the current iteration of Amazon Prime," noted Sheridan. "If Amazon were to raise Prime fees, such a fee increase might need to be accompanied by either a) a higher level of value in the service offering (additional media content, streaming music and/or Fresh (supermarket) offerings) and/or b) an increased level of marketing around the perceived value of Prime to the general public." Of course, with Amazon now off about 15% from its 52-week highs, those concerns might be providing long-term Fools with a high-quality growth opportunity.
More great ways to grow
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.
The article Why Amazon.com, Inc. Slipped This Morning originally appeared on Fool.com.Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.