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The Ratings Game: Could a break-up of Amazon be good for the stock? Analysts weigh in after FTC lawsuit.

Shares of Amazon.com Inc. took a hit on Tuesday following the Federal Trade Commission’s antitrust suit against the online retail giant. But one analyst downplayed the potential risk — even on the off chance that the company gets broken up.

D.A. Davidson analyst Tom Forte, in a note Tuesday, said the lawsuit — which accused Amazon AMZN, -4.03% of illegally maintaining monopoly power to push up prices and suppress competition — wasn’t a surprise, as regulators around the world try to untangle Big Tech from users’ lives. Seventeen state attorneys general joined the FTC in the lawsuit.

He said that while the regulatory swarm has been a nuisance for the likes of Apple Inc. AAPL, -2.34%, Alphabet Inc. GOOG, -2.06% GOOGL, -1.94% and Amazon, it hasn’t affected their share prices or quarterly results.

“We still feel that way, after this news,” Forte said.

He wrote that “in the event the government breaks Amazon into three parts: 1) first-party retail, 2) third-party retail, and 3) cloud computing,” that the stock would still likely be “worth more on a sum-of-the-parts basis, if the lawsuit ends in the company getting cut into pieces.”

“Based on our sum-of-the-parts analysis, we believe shares could be worth as much as $193 (compared to its recent close of $131) and as little as $148,” he continued.

“We believe this suggests there is less risk for AMZN than some investors may believe, following this news.”

Shares of Amazon finished 4% lower during regular trading hours on Tuesday, at $125.98. The stock was largely unchanged in after-hours trade.

Amazon said the FTC’s’ lawsuit was “wrong on the facts and the law,” and some experts told MarketWatch that the agency’s case faces an uphill battle.

Wedbush analysts, in a note on Tuesday, said the FTC’s lawsuit largely focuses on Amazon’s business practices that the agency suspects are intended to keep merchants from lowering prices elsewhere, and efforts by Amazon to promote the use of fulfillment and advertising services. Any win for the FTC, they said, might be on a smaller scale.

“While the FTC may secure some form of victory for itself through the ensuing legal battle — potentially monetary penalties and/or the curbing of certain business practices — we continue to believe any material change to the company’s structure is unlikely,” they said.

“Consistent with our view ahead of the lawsuit’s filing, we would be buyers of the pullback in shares.”

Jon Swartz contributed reporting.

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