Amazon startled investors last night with its report of a huge 3Q profit miss. The stock is off about 11.5% this morning from yesterday’s close of $227.15 before the announcement. But analysts are taking the disclosure in stride, saying that Amazon’s just going through some growing pains while CEO Jeff Bezos awaits a huge inflow of cash from sales of the company’s new Kindle Fire tablet. RBC Capital Markets analyst Ross Sandler maintained his “outperform” recommendation on the stock, although he trimmed the target price to $240 from $265. “We view these quarterly pullbacks as good opportunities to add to (investment) positions, and see the upcoming Kindle Fire product launch as the next catalyst that should allow for revenue upside in 2012,” he says. Credit Suisse’s Spencer Wang also trimmed his target, to $200 from $210, yet maintained his “neutral” position on Amazon. He considers it a “core holding in the sector” but urges investors to wait for “a more attractive entry point.” Another analyst who’s neutral on the stock, Barclays Capital’s Anthony DiClemente, cut his target to $220 from $240, noting that the “extremely strong demand for the Kindle Fire would suggest it may be too early to call a structural slowdown in the underlying Amazon growth story.” And Caris & Co’s Scott Tilghman was unfazed, maintaining his view of Amazon’s prospects as “above average” with a price target of $250. Although high spending on fulfillment centers and new products such as the Kindle hurt 3Q profits, he says they also “set the stage for sustained top-line growth.”
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