Amazon.com, Inc. AMZN 0.56% shares are down more than 4.1 percent in Friday’s session following a disappointing Q3 earnings report. Despite a modest revenue beat, Amazon’s EPS of $0.52 came up well short of analyst estimates of $0.78.

The low earnings number prompted Credit Suisse analyst Stephen Ju to reduce Amazon’s price target from $1,050 to $1,000. But according to Ju, the firm is still extremely bullish on the stock.

“We maintain our Outperform rating and out thesis remains: 1) free cash flow should reset higher as capital intensity to run AWS (with capital and financing leases) is starting to level off as usage drops below 100%, and 2) e-commerce segment operating margin expansion due to continued shipping loss moderation,” Ju explains.

He notes that Amazon choosing to aggressively invest its free cash flow in content, fulfillment centers and data centers should come as no surprise to long-term investors.

Ju points out that AWS margins have crept up from 25 percent in Q3 2015 to 30 percent in Q2 2016 to 32 percent in Q3. Credit Suisse anticipates…

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