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UBS Raises Amazon Price Target To $900

Eric Sheridan of UBS has raised his price target on Amazon.com, Inc. (NASDAQ: AMZN) shares to $900 from $785 after the online retail giant reported strong second-quarter results, driven by a ramp in Prime, category expansion, geographical expansion and logistics/FBA.

Based on Thursday's close of $752.61, the revised price target implies a potential upside of 19.5 percent.

"While concerns have persisted of tough comps and the slope of future investments, we think the Q2 earnings report continues to be part of the recent trendline (consisting of better than expected revs growth & balancing long-term investments (i.e., infrastructure, cloud computing, logistics, content) with margin expansion)," Sheridan wrote in a note.

Related Link: Amazon Is Worth More Than Wal-Mart, Costco And Target Combined

Amazon reported second-quarter EPS of $1.78 versus consensus estimate of $1.11. Sales came in at $30.4 billion versus estimates of $29.54 billion. Amazon expects third-quarter sales of $31 billion to $33.5 billion versus estimates of $31.63 billion.

The analyst, who has a Buy rating on Amazon shares, expects solid margin expansion against better-than-expected revenue guidance, despite high investments in the second half.

Sheridan raised his third-quarter revenue estimate to $32.44 billion from $31.09 billion and lowered the gross margins forecast to 35.6 percent from 36.2 percent.

The analyst also upped his FY 2016 estimates for revenues to $136.5 billion (from $132.9 billion) and lowered the gross margin to 35 percent (from 35.5 percent).

At time of writing, shares of Amazon were up 1.18 percent on the day, seen trading at $761.87.

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