Amazon Emerges As Top Analyst Pick In Holiday Season

JP Morgan analyst Doug Anmuth named Amazon.Com Inc AMZN the top pick following a solid start to the early holiday shopping season.

Early holiday 2024 data points suggest solid U.S. e-commerce growth, with third-party estimates indicating U.S. e-commerce Cyber Week sales growth mainly in line with Anmuth’s projected +7.5% fourth-quarter U.S. e-commerce sales growth (vs. +9.8% in fourth-quarter of 2023).

Adobe and Mastercard data suggest growth exceeded the analyst’s +7.5% estimate on Black Friday, and Adobe indicated in-line growth trends during Cyber Monday and Cyber Week.

Also Read: Amazon And Walmart Dominate Black Friday As Online Sales Soar 14.6%

Salesforce data implies growth in line with Anmuth’s expectations during Black Friday and Cyber Week but with softer Cyber Monday trends. Amazon announced its Black Friday Week and Cyber Monday holiday shopping period was once again its biggest ever, with record sales, record number of items sold, and customers saving billions of dollars.

Holiday 2024 marks the shortest since 2019 (27 days between Thanksgiving and Christmas), but earlier promotions and deeper markdowns should continue to drive solid growth, the analyst said.

Consumers face still-elevated inflation and interest rates, though macro headwinds are broadly stable compared to a year ago.  

The analyst projected U.S. e-commerce penetration at 24.5% of adjusted retail sales this holiday season, +119bps above 23.3% in 2023.

Longer-term, Anmuth noted U.S. e-commerce penetration of adjusted retail sales could nearly double from ~22% today to 40%+ supported by gains across large, underpenetrated categories such as CPG (including Grocery), Apparel & Accessories, & Furniture, Appliances, & Equipment.

Amazon maintains a leading ~45% share of U.S. e-commerce. Anmuth noted it is well positioned during the holiday season, with strong momentum from early holiday promotions, SD1D delivery, regionalization, expansion of the Prime ecosystem, and competitive prices.

Profitero suggested Amazon prices at ~14% average discount to competitors.  

Anmuth projected fourth-quarter retail revenue (non-AWS) growth of +8.9%.

The analyst modeled Amazon’s +7.6 % U.S. GMV (ex Physical Stores) growth, which is in line with his estimated +7.5 % U.S. e-commerce growth and 46.7% U.S. e-commerce share in the fourth quarter (+2bps).

Is Amazon A Good Stock To Buy?

An investor or trader's decision to buy or sell a stock is unique to their time horizon and risk tolerance. Many typical investors evaluate earnings growth and valuation on a particular stock before making a decision.

For example, for Amazon.com AMZN, you'll notice that earnings in its last quarter grew 25.44% source. As an investor, you'll want to decide whether that's better or worse than what you'd like to see among stocks in your portfolio.

On the valuation side, Amazon.com's price to earnings ratio – a measure of how much an investor pays for the company's earnings – is compressed 50.9% in the current quarter when compared with last year. That places it above similar businesses Alibaba Gr Hldgs, PDD Holdings, MercadoLibre in its sector. You'll need to decide whether that makes it more or less attractive based on how you think the company will perform over time.

There are many different valuation metrics that may help you make a decision. Find more on Amazon.com's quote page, or if you'd like a deeper dive in an advanced program, try Benzinga PRO for free.

Price Action: AMZN stock is up 2.35% at $218.47 at last check Wednesday.

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