Ahead of the Bell: Analysts praise Amazon results, raise forecasts and price targets

Ahead of the Bell: Analysts like Amazon results

NEW YORK — Analysts applauded Amazon.com’s fourth-quarter earnings report, and several raised their price targets for the stock.

Shares of the Internet retailer rose $3.98, or 3.2 percent, at $130.01 in premarket trading Friday.

Late Thursday, Amazon said it earned $384 million, or 85 cents per share in the October to December period, blowing past the previous holiday season and analyst expectations. Revenue rose 42 percent to $9.52 billion.

Amazon forecast revenue of $6.45 billion to $7 billion in the current quarter, an increase of 32 percent to 43 percent. According to Thomson Reuters, analysts had been looking for $6.36 billion, on average.

Analyst Aaron Kessler at Kaufman Bros. noted that Amazon’s gross margin in North America rose by 2.1 percentage points as it’s gaining scale. He raised his revenue and earnings estimates for the year and his price target on the stock from $155 to $160. He reaffirmed a “Buy” rating.

At Jefferies & Co., Youssef Squali also raised his price target, from $150 to $160. He sees sales of the Kindle e-book reader and e-books as a big contributor to growth, but noted that the introduction of Apple Inc.’s iPad tablet could put a damper on results.

Shawn Milne at Janney Capital Markets raised his earnings estimate for the current year to $3.50 per share, excluding items, from $3.25. He maintained a “Buy” rating.

Colin Sebastian at Lazard Capital Markets was more moderate in his praise. He agreed that Amazon.com Inc. is gaining share in the growing field of Internet retail, but maintained a “Hold” rating, saying that the share look expensive at 35 times projected 2010 earnings.