Amazon Earnings: Good Quarter With Reasonable Guidance After Unusual Adjustments

We are raising our fair value estimate for wide-moat Amazon to $240 per share from $200 after the company reported strong fourth-quarter results. The firm’s first-quarter outlook was slightly better than we expected, despite including more than $2 billion of incremental currency pressure on revenue. Additionally, given the early returns on the profitability front from the ongoing network improvement efforts, we modestly raised our profitability and working capital assumptions throughout our forecast period, which had a substantial impact on our valuation. When operating margins are relatively modest, even small improvements are meaningful. We see shares as fairly valued, after a strong run since early August.