Amazon slips on pre-earnings Citi downgrade

|By:, SA News Editor

Citi has downgraded Amazon (AMZN -0.7%) to Neutral ahead of Thursday's Q2 report, and cut its target by $19 to $395.

Though believing Amazon's core retail ops are performing well - ChannelAdvisor's June data was quite healthy - Citi notes many investors have grown frustrated over a lack of earnings leverage. It also thinks heavy capex and major price cuts for AWS will pressure margins over the near-term.

Also: UBS is out with a cautious note, stating survey data indicates heavy opex will limit margin upside.

Shares have underperformed the Nasdaq this year, but have also staged a healthy rally from their May lows. Its 2015 EBITDA estimates are below consensus.

Update (12:10 PM): Shares have shrugged off the downgrade, and are now up 0.4%.