Amazon (AMZN) Remains Top 2022 FANG Stock at BofA, Analyst Expects Headwinds to Ease

January 10, 2022 6:41 AM EST
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Price: $2,151.82 +0.25%

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BofA analyst Justin Post reiterated a Buy rating and a $4,450.00 per share price target on Amazon (NASDAQ: AMZN) despite the near-term headwinds that caused the stock to underperform the S&P 500 last year.

Headwinds, including decelerating eCommerce growth, supply chain issues, local delivery competitive concerns, and multiple compression among others, are expected to ease in 2022 according to Post. Hence, the analyst still sees Amazon as the top 2022 FANG stock to own.

“We have a positive outlook for 3-5 year eCommerce growth given sub-20% penetration, and, with market share gains in 2021, we see Amazon as well positioned for sector growth reacceleration in 2H’22 and into 2023. The shift to the Cloud is also still in its early stages, with only 5-15% of IT spending off-premises. AWS had a strong 2021, with three straight quarters of accelerating revenue growth, and with revenue dollar growth well above peers. We estimate that AWS, advertising and 3P commissions have $70bn+ of earnings power in 2023, and expect material margin improvement next year,” the analyst said.

Post is calling for revenue and GAAP profit of $120.4 billion and $4.5 billion, respectively, which is lower than the Street consensus of $122.1 billion and $7 billion.

“While we see potential for improving margin conditions vs. 4Q, we expect continued investment spend in 1Q. For FY22, we forecast revenue/EBITDA of $548bn/$80.4bn vs. Street at $555bn/$83.6bn. We are below Street, but think investors are anticipating below Street ests, and will look forward to margin improvement in 2023,” the analyst concluded.

AMZN stock price closed at $3,251.08 on Friday.

By Senad Karaahmetovic | [email protected]

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