Jefferies Gives Color On Amazon.com Following Earnings Release

According to Jefferies, this is not an easy stock to own into earnings, for fear of an EPS miss as shown last night, but it remain positive on Amazon's AMZN given material market share gain with a growth rate that's twice that of the industry, an e-commerce opportunity that's still nascent WW, and aggressive investments that are likely to enhance its competitive moat. While the stock is not cheap, Jefferies believes that Amazon is a winner in the long-run. Despite the hit from Japan, WW unit sales growth accelerated to 51% Y/Y from 43% in 4Q10, attesting to the success of growth investments, Prime adoption and Kindle. Jefferies estimates ~4M in Kindle units in 1Q, generating ~$670M in GAAP revenue while e-book yielding and additional $300M in sales. Amazon was not an easy stock to own going into earnings considering the lack of visibility into margins and mgt's staunch belief in the merits of long-term investments at the expense of short-term margins. That said, Jefferies believes that revenue growth and not margin is the story here, and is likely to remain the primary driver of the stock ST, and earnings over time. Jefferies has a $205 PT and Buy rating on AMZN AMZN closed Tuesday at $182.30