Amazon (AMZN) Prime Day Preview: 'Uniquely Positioned to Exit This Crisis as One of the Biggest Beneficiaries'

June 18, 2021 9:32 AM EDT
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Amazon (NASDAQ: AMZN) is preparing to host Amazon Prime Day on June 21 and 22. This year, the event belongs to the June quarter, rather than the September quarter, after being held in October last year amid the pandemic.

Brian White, an analyst at Monness, Crespi, Hardt, shared his thoughts on Amazon before next week’s event and in the light of the House escalating its pursuit of Big Tech. He rates the stock as “Buy” with a $4,500 price target.

“Last week, five bills were drafted by the House Judiciary Committee’s Antitrust Subcommittee to reign in Big Tech. These bills are targeted at Alphabet (GOOGL/Buy), Facebook (FB/Buy), Apple (AAPL/Buy), and Amazon. Antitrust Subcommittee Ranking Member, Ken Buck believes, “Big Tech has abused its dominance in the marketplace to crush competitors, censor speech, and control how we see and understand the world. Apple, Amazon, Facebook, and Google have prioritized power over innovation and harmed American businesses and consumers in the process.” Although parts of each bill may carry consequences for all four Big Tech companies, some bills appear more consequential than others. In our view, the “Ending Platform Monopolies Act” appears highly relevant to Amazon,” the analyst said in a note.

Telsey analyst Joseph Feldman projects 2021 Prime Day sales of $11.0 billion to $12.0 billion (US sales of $8.0 billion -$8.5 billion), up 6.0%-16.0% from Statista’s estimate of $10.4 billion in 2020.

“The company should benefit from a favorable macro environment, including the ongoing shift toward online, strong discretionary demand, a larger global Prime member base, a wider product assortment, particularly private brands, and an increase in participation by small businesses. This should be partly offset by the timing shift to June from October last year—a higher volume period of the year when consumers start shopping for holiday items. Furthermore, the intensity of promotions could be limited in 2021, given tight inventory across retail due to supply-chain constraints and elevated operating costs. In response to Prime Day, we expect promotions (planned / pulled ahead) from other retailers to leverage the excitement and online traffic, which should result in two solid selling days across retail.”

Feldman has a $4,000 price target on the Outperform-rated AMZN.

“Amazon is executing at a high level and gaining market share by leveraging its sticky customer base (over 200MM global Prime members), small business relationships, and retail consolidation. The focus on newer businesses and initiatives—grocery, pharmacy, fashion, home, private brands, third-party, same-day/one-day delivery, and Amazon Logistics—is making Amazon more valuable. The strong growth and profitability of AWS, as well as new media and advertising offerings, should continue to outperform the company average and support Retail,” he concludes.

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Brian White