Amazon Stock Drops as Bulls on Wall Street Push for Long-Term Gains
October 28, 2022 at 10:43 AM EDT
On Friday, there was talk about Amazon (NASDAQ:AMZN), as the e-commerce company’s estimate for slower-than-anticipated growth alarmed investors. The long-term bull thesis on Amazon (NASDAQ:AMZN) is still very much alive, analysts hammered home on Wall Street, despite the near-term consumer headwinds.
Goldman Sachs lowered its price target for Amazon (NASDAQ:AMZN) from $176 to $165, but it still thinks the stock will do well in the long run. Based on our research, we are still sure that Amazon’s operating income margin will increase over a number of years thanks to better eCommerce margins, lower international losses, and a stronger profit margin mix contribution from AWS and advertising. Although it dropped its price target to $140 for the near term, Morgan Stanley retained an outperform rating on AMZN and still sees it as a long-term winner.
“Amazon is seeing the consumer/enterprise slowdown more than predicted, resulting in lower rev and a steeper slope of volume-based efficiency. But we think Amazon is positioned to take share during a downturn, view forward investment levels low, and see the possibility of cost reduction. ” The good news, according to Bernstein, is that the Amazon story is only being delayed until 2023 rather than being broken.
According to Bank of America, higher energy costs and a shift in consumer spending toward leisure activities made the Amazon (NASDAQ:AMZN) projection especially cautious. Notably, the company warned that Amazon’s view could mean that a recession is coming to the U.S. BofA maintained its Buy rating for Amazon.com, Inc. and set a $137 price target.
We believe Amazon is well-positioned to benefit from the expansion of online shopping around the world as well as other long-term developments, including cloud computing, online advertising, and linked devices. J.P. Morgan said that the main problems Amazon is facing are macroeconomic and not fundamental. Although the price objective was reduced from $175 to $145, the firm kept an Overweight rating. Despite lowering its price target from $164 to $130, Raymond James reaffirmed its Outperform rating and remained bullish on Amazon (NASDAQ: AMZN).
Even though we expect growth to be harder to predict in the near future, RJ said, “We remain optimistic about long-term growth for both retail and AWS, with margins rising over time as Amazon focuses on improving productivity.”
Evercore ISI said that Amazon (NASDAQ:AMZN) has a history of making it through economic downturns and has been cutting costs since Q1. The firm believes that investors may rest easy Amazon is outperforming the market and will protect its profits in the coming quarters. Due to impending pressures, the price target was reduced from $180 to $170. In premarket trading on Friday, Amazon (NASDAQ:AMZN) stock fell 12.95% to $96.62, recouping some of the loss from when the earnings report was released for the first time on Thursday after the closing bell.
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