After the close on Thursday (April 28), Amazon (AMZN) will take its turn to deliver Q1’s financials. 2021 was a year in which the ecommerce giant had to contend with what Monness’ Brian White calls the “post-lockdown blues,” which impacted Amazon’s ecommerce sales. But now, the company has a whole new set of unwanted developments to fend off.
Inflation is a burden and following a worker victory in Staten Island, unions are “knocking on Amazon’s door.” And the stock hasn’t been immune to the market’s downturn; shares are down 16% year-to-date.
That said, White notes that Amazon has fared better than the average company under his coverage, and the analyst expects Amazon will “at least meet” his 1Q22 revenue estimate of $116.32 billion and EPS projection of $7.11.
As a reflection of the overall slowdown in consumers’ spending behavior, White’s expectation of 7% year-over-year revenue growth amounts to the lowest quarterly sales growth rate since Monness began taking notes in 2006, although the anticipated 15% sequential decline matches the four-year average of previous March quarters.
A look at Amazon's website traffic tells a similar story of quarter-over-quarter drop but year-over-year improvement. Total unique visitors (UVs) increased by 17.81% from the same period last year but show a sequential decline of 10.21%.
Elsewhere, White anticipates AWS will get star billing again, and show the fastest rate of growth for the fourth consecutive quarter, while the Prime membership price hike announced on the last earnings call should go some way toward providing “some cushion against inflation.”
White expects more antitrust investigations, against a backdrop of a geopolitical environment “growing more dangerous by the day.” Moreover, the impact of inflation “remains a wildcard.”
Nevertheless, the analyst concludes that Amazon is “uniquely positioned to exit this crisis as one of the biggest beneficiaries of accelerated digital transformation.”
To this end, White maintains a Buy rating on Amazon shares, backed by a $4,500 price target. Should the target be met, investors are looking at returns of 61% in the year ahead. (To watch White’s track record, click here)
The rest of the Street has no bones to pick with White's assessment. AMZN's Strong Buy consensus rating is based on 35 Buys, and 1 Hold and Sell each. With an average price target of $4,100 and a change, investors stand to take home about 47% gain, should the target be met over the next 12 months. (See Amazon stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.