USB Piper Says Buy Amazon on Weakness

Although analyst Safa Rashtchy says the online media company's revenues were weak, he thinks investors should focus on margins and profits

USB Piper says buy Amazon.com (AMZN ) on weakness.

Analyst Safa Rashtchy says weakness is due to expectations of even higher revenue growth. However, he thinks the focus should be on margins and profits. Rashtchy believes a key highlight of second quarter performance was delivering 6% EBITDA margin, which is what he targeted for 2003. He notes this is despite lower prices, a direct result of increased efficiencies, and buying power. Margin growth translates into much higher profits for 2003, making valuation significantly better. Rashtchy raised the $0.11 2003 loss (GAAP) estimate to $0.05 earnings per share. He reiterates his outperform rating and $17 target.