Why Credit Suisse Now Considers Amazon A 'Freight Forwarder'

Credit Suisse issued a report on Amazon.com, Inc. AMZN after reports that Amazon registered with the Federal Maritime Commission to be a freight forwarder. Credit Suisse maintained its Outperform rating and $800 price target.

Credit Suisse analysts Stephen Ju and Yoni Yadgaran wrote, "As our AWS DCF valuation stands at $149b, this implies the Street is mispricing Amazon's e-commerce franchise...E-commerce segment operating margin expansion due to continued shipping loss moderation."

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As a freight forwarder, Amazon will be known as Beijing Century Joyo Courier Service Co Ltd and this move may provide important advantages to Amazon in the Asia region.

First, analysts note that being a freight forwarder may allow Amazon to offer Chinese consumers guaranteed authentic products, which it can charge a higher price for and achieve margin expansion. Second, this move to be a freight forwarder may improve Amazon's ability to connect Chinese supply with global demand.

This has the potential for Amazon to drive further top line growth and improve its market share in the Asia-Pacific region. However, a key risk to Amazon that Credit Suisse analysts mentioned is a higher than anticipated capital requirement to drive investment in Asia could negatively impact free cash flow estimates.