Amazon shares positioned for outperformance, Wells Fargo says
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Amazon.com (NASDAQ:AMZN) is a "Signature Pick" at Wells Fargo with shares at an attractive price.
The firm has an Overweight rating on the stock and price target of $165.
Shares are down 3.2% on Thursday.
Wells Fargo left 2024 estimates largely unchanged and AMZN shares remain attractively positioned for 2024 and 2025 outperformance but it's taking a slightly more cautious stance into the fourth quarter of this year.
The firm noted that AMZN's announcement of an additional 250,000 workers for the holiday season is up 66% from a year earlier.
"Elevated seasonal labor hiring could indicate efficiency gains take a step back during peak 4Q throughput period," the firm wrote in a note.
External pressure from fuel and heightened competition may also weigh on the fourth quarter.
Strong Buy
Seeking Alpha analyst Julian Lin called the company a Strong Buy on Thursday.
"Given that AMZN has been able to achieve such dominance in e-commerce on account of its deep investment in its fulfillment network, investors in theory should be hoping for as little profits as possible due to the implication of greater capital being invested - an ironic point," the analyst wrote.
"In order to avoid penalizing AMZN for choosing to invest aggressively in its long term growth ambitions, I choose to value the stock based on long term margin assumptions."
Investors should also be prepared for significant volatility especially given AMZN's exposure to macro conditions, Lin said.
"I expect both the e-commerce and AWS businesses to eventually be rewarded with more resilient earnings multiples like those seen at Walmart (WMT) or Apple (AAPL), but it may be some time before the broader investor base catches on."

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