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Barclays Cuts Estimates; All Eyes on Growth, Taxes

Barclays Capital‘s Anthony DiClemente, who has an Equal Weight rating on the stock, this afternoon cut his estimates for last quarter and this, and cut his price target from $240 to $230, based on data he’s seen from research firms ChannelAdvisor and ComScore that seemed to show revenue slowed in August and September.

DiClemente cut his revenue growth estimate for the quarter to 26% from 29%, and he cut his Q3 estimate to $13.73 billion in revenue and a 19-cent loss from a prior $14 billion and an 18-cent loss. For Q4, he now sees $22.5 billion and 41 cents profit, down from $24.7 billion and 52 cents.

Others see the slowdown as well, but are less concerned.

Piper Jaffray‘s Gene Munster reiterates an Overweight rating on the stock, and a $297 price target, projecting the company may turn in something in between $13.6 billion and $13.9 billion for the revenue number, but might produce as much as 3 cents a share in profit.

Munster cites the ChannelAdvisor numbers as well, writing that they show Amazon’s average sales rose by 40% in September, which is a slowdown from the 46% growth seen in June, on average. He thinks North American sales growth cooled to 27% from 36%.

However, improvements in shipping costs may help Amazon deliver a surprise profit. Munster thinks the outlook for this quarter may be 3% to 4% below the current Street view of $22.9 billion and 53 cents a share.

Lazard Capital’s Atul Bagga reiterates a Buy rating, calling for “in line” results. He expects 28% year-over-year growth from Amazon’s “marketplace” business, down from 29% in Q2.

Bagga thinks many investors will want to know how the commencement of sales tax collection in California has impacted sales:

We believe investors will be looking forward to hearing management’s comments about sales momentum in California since the company started collecting sales tax there. Recall that our survey of 1,000+ online shoppers suggested no meaningful deviation in buying habits for those who pay sales tax versus those who do not pay sales tax.

And Needham & Co.’s Kerry Rice reiterates a Hold rating on the stock, writing that despite in-line revenue tomorrow, the company could deliver EPS of breakeven as the company improves its distribution system:

We expect Amazon to continue to scale its distribution center network as a result of the sales tax collection agreements reached with several states. We also believe the increased costs of digital content could weigh on margin. However, Amazon’s recent gross margin from growth of 3P, AWS, pricing power, and digital goods should offset some of this pressure.
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