After two years of unanimous buy ratings, bearishness has reached Amazon () - stock. First, we had. Now, we have a "hold" rating from Rosenblatt Securities analyst Barton Crockett.
Crockett has set a $3,000 price target with the Holding.
Who's right, with other analysts calling Amazon 2022's ultimate internet stock? Will inflation lose Amazon's long-term hold on the internet retail business?
Are you looking to hold AMZN in Figure 1? Why Is One Analyst Neutral on the E-commerce Titan's Stock?
Amazon Maven: (Read More)
The Reason to Sell in E-commerce
Rosenblatt Securities believes Amazon will not be able to stand its ground against ongoing inflation. Crockett's main concern is that retail is a very competitive industry with very limited margins, which make it impossible for any of the players to transfer price increases to consumers.
"Amazon's competitors have increased their retail game significantly with click [and] brick features, and Amazon can't match it with its small store footprint," Crockett said.
Although I personally agree that inflation will cut Amazon's profitability, I don't believe competition will play a significant role in the process, for two main reasons:
The Reason to Buy AWS
Although Crockett has a negative outlook for the e-commerce industry, Amazon's Services business, which includes the cloud and advertising sectors, will remain stable. He agrees that non only will AWS remain not only profitable, but it still has room to expand.
Both AWS and the company's advertising sectors, according to Amazon Maven recently, are promising and should deliver decent gains over the next few years.
To ensure Amazon is increasing faster than its industry peers, investors should keep an eye on Google () -, Microsoft () - - and Meta () results.
Sell + Buy = Hold
The whole stock market has been shaken by fears of inflation. The S&P 500 has risen by about 11% from the previous year, and the Nasdaq Composite has decreased by nearly 19% of its value.
From that perspective, Amazon's 15% market value decrease appears to be more correlated to a general bearish sentiment about the whole stock market, rather than to a specific problem with the company's fundamentals.
For investors who believe Amazon is on course to outperform the market, its current stock prices appear to be a good window of opportunity. And for those who believe the opposite, Amazon's valuation remains very aggressive, which means the future earnings conference may significantly reduce their shares.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Aside from this, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Amazon Maven)