Benchmark Upgrades Amazon (AMZN)

Benchmark Capital is upgrading shares of Amazon.com, Inc. AMZN to Buy from Hold, and is raising its price target on shares to $210 from $200. In the research report, Benchmark writes, "US ecommerce spending accelerated during the holiday season to 13% growth despite tough comparisons, with Apparel, Electronics, Healthy & Beauty, Toys and Sporting Goods all rising, and bringing total US ecommerce growth to 10% y/y in 2010. We expect the momentum to carry over into 2011, with online spending grabbing increased share from rebounding traditional brick and mortar retailers. We estimate US ecommerce spending may grow by 10% y/y to $157 billion in 2011." Benchmark goes on to say, "Amazon's Kindle 3 has been reported as the “Biggest Seller” ever. More than 8 million Kindle sales may have occurred in 2010. The Kindle's $139 price point, smaller size and lightness, month-long battery life and ease to read helped drive sales. We estimate the Kindle may represent about 5% of sales for Amazon. Amazon could generate over $45 billion in net revenue in 2011, up 30% y/y, driven by 14% y/y growth in Media revenue and a 43% y/y increase in EGM revenue. As Amazon cycles through its internal investment process, margins could see a modest recovery, providing upside to our estimate of a slight y/y decline in OIBDA margins to 7.1% and OIBDA growth of 29% y/y to $3.2 billion in 2011." Shares of AMZN are up $1.37 in pre-market trading to $185.59, a gain of 0.74%.