Here's Why This Analyst Is Cautious On Amazon

BNP Paribas Exane gave an Underperform rating to Amazon.com Inc AMZN, citing a bumpy ride ahead due to surging inflation and higher expenses.
Analyst Stefan Slowinski said investments during the pandemic to build fulfillment centers for faster deliveries and employee bonuses to keep its warehouses staffed in a tight U.S. labor market may eat into its margins.
He added that capital expenditure could grow in the mid-teens, initiating a price target of $2,800, implying a downside of 15.8%.
While margin expansion is possible, the consumer is under pressure with high inflation. Amazon has already raised prices on their customers by increasing their Prime pricing.
Amazon would not raise pricing on many products to match inflation and probably take a hit.
Amazon would need to allocate capital expenditure for its cloud business as it looked to expand its footprint by about 30% in a competitive market.
Price Action: AMZN shares traded lower by 1.46% at $3,336.97 on the last check Wednesday.

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