Zacks Investment Research downgraded shares of Amazon.com Inc (AMZN) from NEUTRAL to UNDERPERFORM on February 20, 2012, with a target price of $166.00.
Amazon.com is one of the largest online retailers in the world and despite its high market share, continues to grow strongly. However, the company's decision to significantly increase the number of fulfillment centers to cater to demand across different markets will likely continue in 2012, negatively impacting its earnings. Stiff competition and the corresponding negative impact on prices are also expected to continue. We believe that current investments are supported by the strong balance sheet and expect them to drive the next growth phase, enabling international expansion. However, it is not clear how long the investment phase will continue, which makes us incrementally cautious. We are therefore downgrading the shares from Neutral to Underperform.
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