Amazon Inc. AMZN It was one of the worst performing megacap stocks as it plummeted nearly 50% in 2022.Analyst UBSMore recently lowered its stock price target.
Amazon analyst: UBS analyst Lloyd Walsley maintained a buy rating and lowered its target price from $165 to $125.
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Amazon’s proposition: consensus estimate of Amazon Web ServicesAlso AWS, cloud services are “quite overpriced,” said Walmsley. The cloud market is in the midst of market maturation characterized by customer efforts to optimize or reduce cloud spending, delays in migrating new workloads to avoid initial costs, and slowing growth of workloads that are difficult to migrate. said Walmsley, citing UBS Software Team analysis. .
Analysts therefore “meaningfully” modeled below-consensus top-line growth of 18.4% y/y in AWS in 2023, and slowed growth in 2024. Walmsley also lowered his estimate of AWS revenue growth for the fourth quarter to 21%.
Citing US Department of Commerce data, Walmsley said trends in the retail industry ended the year on a positive note. mastercard U.S. e-commerce spending remained strong, with online sales growing 10.6% from Nov. 1 to Dec. 24, he added, according to SpendingPulse data.
Walmsley said retail sales are below consensus, but profit margins are above consensus.
Analysts believe the margin thesis is intact, but believe it will take time for the company to realize cost savings. The slowing top-line growth is largely priced into the stock price, he added, as the company is trading at his decade-low valuation of EV/EBIT and EV/EBITDA.
“Our analysis shows that even with the lowest estimates and reduced target multiples, equities are up 46% in PT, with a risk/reward skew of 3.5:1 up/down,” Walmsley said. rice field.
Price action: Amazon ended Wednesday’s session down 0.79% at $85.14, according to Benzinga Pro data.
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