Why Amazon Stock Is Arguably The Holy Grail, Although Cloud Buyers Are Becoming ‘More Surgical’ By Benzinga

Benzinga – Although Evercore ISI Group cut its price target Amazon.com, Inc. (NASDAQ: AMZN ) wiped out shares last month, but analysts expected the stock to nearly double in the next year.

Here’s why Evercore is urging its potential long-term investment clients to buy Amazon with both hands, calling it a “buffet buy.”

What happened: Analyst at Evercore Mark Mahaney It kept Amazon at Outperform and cut its price target to $150 from $170, citing new data showing continued softness in demand for online retail and cloud computing.

“The last three data points on the retail side and one on the cloud computing side lower our estimates,” Mahaney wrote in a December note to clients.

Retailers’ sales research shows that demand for discretionary products is slowing compared to core products. At the end of October, sales of discretionary goods slowed before Thanksgiving.

“But since Thanksgiving, discretionary sales have slowed again,” Mahaney said.

Much of Amazon’s retail business is discretionary. Evercore estimates it could be as high as 70% or 80%.

A separate holiday poll told a different story.

“There is a clear shift to online and mobile shopping channels, which is in stark contrast to the ’21 holiday reopening trend, and Amazon is the clear winner in nearly every shopping category in terms of consumer spending intent,” Mahaney said. .

However, the expert cautioned that 2022 is the first year “get a cheap gift” passed “increase online sales” Here’s one way to save money this holiday season.

Mahaney also pointed to November’s retail sales data, which showed weak discretionary spending. The biggest losers were electronics, home furnishings and general merchandise, typically strong categories for Amazon.

The aforementioned single data point on the cloud computing side surrounds Amazon’s re:Invent event. The key takeaways are that cloud buyers have become “a little more surgical” in a challenging macro environment, according to Evercore.

Although the latest news has prompted Evercore to revise its near-term outlook, the firm recommends Amazon for investors with a horizon of more than two years.

“AMZN remains the highest-quality asset we cover, in part due to the lack of cost measures to date, while the company will need to lower Street estimates on both the top and bottom lines, negatively impacted by a potential 2023 recession. Earnings and Earnings Outlook,” Evercore said. said.

Related link: US watchdog pokes fun at Amazon’s weakness in recording workplace injuries

AMZN price action: Amazon has a 52-week high of $170.83 and a 52-week low of $81.43, according to Benzinga Pro.

Originally published on December 19, 2022

Image: Courtesy of Amazon.

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