Reuters: Technology News: Amazon soars as digital sales boost margins

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Amazon soars as digital sales boost margins Apr 27th 2012, 12:39 Tweet Share this Email Print Related News Amazon's streak of Fire ignites shares Thu, Apr 26 2012 Housing, profits lift Wall Street, Amazon up late Thu, Apr 26 2012 Instant View: Amazon trounces Street targets, shares soar Thu, Apr 26 2012 After Apple, Amazon, too, may be in for wild ride Thu, Apr 26 2012 Apple crushes Street targets, dispels iPhone fears Wed, Apr 25 2012 Analysis & Opinion Why internet/GDP ratios make no sense All your Tumblr are belong to Them Related Topics Tech » Hot Stocks » Asian Markets » Media » A box from Amazon.com is pictured on the porch of a house in Golden, Colorado July 23, 2008. Credit: Reuters/Rick Wilking Fri Apr 27, 2012 8:39am EDT (Reuters) - Shares of Amazon.com Inc rose 16 percent in premarket trading on Friday, after the world's largest Internet retailer reported a surprise increase in gross margins, prompting a slew of price target increases by analysts. Amazon on Thursday posted better-than-expected quarterly results as heavy spending on infrastructure and new products like the Kindle Fire began to pay off through sales of more digital content on the tablet. "The biggest surprise in the quarter was Amazon's gross margin increase of 120 basis points year-over-year, the largest uptick in ten years," RBC Capital Markets analyst Ross Sandler said. Faster growth at Amazon Web Services and sales of its digital goods drove the improvement in margins, analysts said. During the first quarter, nine of the 10 top-selling products on Amazon.com were digital products, including Kindle e-books, movies, music and apps. "Bulls have been waiting a long time for this gross margin upside and it finally came in the first-quarter," Macquarie Equities Research analyst Ben Schachter said. The company's shares had been hit by the lack of the margin growth over the past few months. Schachter expects gross margins to continue to ramp up in the long term as the company benefits from the increasing use of the Internet. Analysts at Macquarie, RBC, Citigroup and at least nine other brokerages raised their price target on the stock. Nomura upgraded it to "buy" from "neutral". According to Thomson Reuters StarMine, 12 analysts rate the stock "strong buy," 11 a "buy," 15 a "hold" and one a "sell." Only one rates the stock "strong sell." Analysts have a mean price target of $218.69. Amazon shares were up at $227.75 in premarket trade. They closed at $195.99 on Thursday on the Nasdaq. (Reporting by Juhi Arora, Tenzin Pema and Mihir Dalal in Bangalore; Editing by Saumyadeb Chakrabarty) Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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