Is Amazon a cash cow?
Amazon’s cloud business is another key value driver. As the most profitable business vertical, the cloud has been the typical cash cow for Amazon. Cloud and e-commerce are two of the promising investment themes and AMZN has strong positions in both of them. AMZN stock trades at an NTM (next-12 month) PE multiple of just over 58x which looks very attractive.
Is AMZN going to be sustainable?
To be sure, it's largely accepted that the boom of 2020 for companies like AMZN wasn’t sustainable. The company also referred to tougher year-over-year comparisons in the back half of 2021 alluding to the pandemic-driven high growth rates of 2020.
Is Cowen overweight on Amazon?
Cowen, for instance, reiterated its “overweight” rating and said that it sees the $1.2 trillion grocery market in the U.S. as a key driver for Amazon. Morgan Stanley also reiterated its “overweight” rating on AMZN and is particularly bullish on the massive investments that the company is making in logistics.
Amazon stock recent developments
Netflix released its fourth-quarter earnings yesterday. It was the first FAANG name to release its earnings. However, the earnings were a big disappointment and despite massive investment into new content, the company’s subscriber growth numbers were below estimates.
Anti-trust trouble
US tech giants have been facing heat over their alleged monopolies. The Senate Judiciary Committee has approved an anti-trust bill. As expected, tech giants like Apple and Google have opposed the bill. An Amazon spokesperson termed it an “ambiguously worded bill with significant unintended consequences” for small businesses.
Amazon would release fourth-quarter earnings
Amazon would soon release its fourth-quarter earnings. Analysts polled by TIKR expect the company to post revenues of $137.6 billion, a YoY rise of 9.7%. Here it is worth noting that AMZN has missed revenue estimates for two consecutive quarters. Also, its fourth-quarter guidance was also below par.
AMZN stock forecast
Despite the underperformance, Wall Street analysts remain bullish on Amazon stock. Many brokerages including Cowen, Bank of America, and Goldman Sachs have listed Amazon as a top pick for 2022.
Amazon has a strong competitive position
Amazon is the leader in the US e-commerce market. Also, it is the largest cloud infrastructure company accounting for almost a third of the total market. The pace of digitization has increased due to the COVID-19 pandemic. A lot of consumers who were not comfortable with online shopping have also pivoted to buying goods online.
Amazon stock long term forecast
Amazon is not only an e-commerce platform but a complete ecosystem. The company has services like Prime which add to customer stickiness on the platform. Also, it is a play on the massive amount of user data that it has which it can use to show relevant products.
Should you buy AMZN stock?
AMZN’s valuations look attractive after the recent underperformance. There has been a sell-off in growth names which has hit all the companies, including the fundamentally strong quality names like Amazon. However, AMZN is a long-term growth story as both e-commerce and cloud are structural growth themes.