Amazon.com Inc. AMZN has shifted its focus from Cyber Monday to Black Friday for the second year in a row and is reaping the benefits of this move, according to Deepwater Asset Management's Gene Munster.
This strategic pivot aligns with Amazon’s tradition of creating its own sales events, such as Prime Day.
What Happened: Munster notes that potential changes to tariffs, especially to the rule on import duty on products valued at over $800, could adversely affect Amazon.
Despite this, the retail sector is gaining momentum, with sales growth accelerating over the past eight quarters. Paid units have risen from 8% in December 2022 to 12% in September.
Retail profitability is also improving. Although Amazon does not disclose specific retail operating margins, Munster estimates an improvement from a negative 3% two years ago to a positive 5% in the latest quarter.
He suggests that further improvements to 7% in 2025 could significantly boost earnings per share to $7.15, compared to current expectations of $6.15.
This improvement could position Amazon’s stock to trade at a forward multiple similar to other tech giants like Microsoft Corp., Apple Inc., and NVIDIA Corp.
Why It Matters: The shift to Black Friday comes amid a frenzied shopping season, with retailers across the U.S. and Europe rolling out deals to attract bargain hunters.
Stores opened as early as 5 a.m. following Thanksgiving, despite a shortened shopping season. This strategic timing is crucial as the holiday shopping season has been reshaped, with consumers making purchases earlier due to ongoing discounts.
Additionally, the potential impact of proposed tariffs by the incoming Trump administration could create economic challenges. Analysts warn that these tariffs, aimed at addressing trade imbalances, might inadvertently lead to a stronger dollar, affecting both consumers and businesses.
Despite these challenges, the Black Friday to Cyber Monday period is expected to break sales records, with U.S. retail sales projected to reach $75 billion, marking a 5% year-over-year growth. This underscores the importance of this key shopping period for retailers, as highlighted by Bain & Company.
Price Action: Amazon stock closed at $207.89 on Friday, up by 1.05%. Year-to-date, Amazon's shares have gained nearly 39%, according to Benzinga Pro data.
The consensus analyst rating on the Amazon stock is currently "Buy," according to Benzinga Pro. The highest price target is $285, while the lowest is $197. At a consensus price target of $238.16, data shows there is an upside of 14.6%.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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