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Amazon More Resilient, 'But Not Immune' - BofA

Stock Markets Sep 19, 2022 15:26
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By Sam Boughedda

A BofA analyst reaffirmed a Buy rating and $170 price target on Amazon (NASDAQ:AMZN) shares Monday, saying that Amazon should be more resilient to the economic slowdown but not immune.

The note followed Amazon's more than 2% fall Friday after FedEx (NYSE:FDX) pre-announced Q1 results, highlighting rapidly declining package volumes globally. FedEx CEO Raj Subramaniam added that he expects the global economy "is going into a worldwide recession."

The analyst noted that FedEx also said its business with its top two clients (Target (NYSE:TGT) and Walmart (NYSE:WMT)) was lower than expected, which BofA views as "another cautionary data point" for Amazon.

However, while the analyst said the news is a negative read for eCommerce, they see several reasons why Amazon may be less impacted than its peers:

"1) Amazon no longer ships with Fedex; 2) Amazon has well over 50% of volumes in the US, 3) Amazon likely has a higher-income avg consumer than Big-3 competitors (Walmart, Target , EBAY), and saw no discernable trade-down in Q2 away from discretionary items; 4) With Amazon's wide third party selection and fast delivery speeds, we expect some share gains from competitors that may be using Fedex," the analyst wrote.

"Amazon guided to 9pts of ex-FX acceleration in revenue growth for 3Q, and though volumes would not be immune to a recession, we would expected added 3Q strength vs the industry due to Prime Day," he added.

Amazon More Resilient, 'But Not Immune' - BofA
 

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