By Sam Boughedda
Ahead of Amazon's (NASDAQ:AMZN) latest earnings release on July 28, analysts at BofA and Jefferies cut their price targets on the stock.
BofA reiterated a Buy rating but lowered the firm's price target from $188 to $168, telling clients in a research note that they are lowering 2022 and 2023 estimates to reflect recent FX pressure and the BofA outlook for a mild fourth quarter recession.
"Ex-FX, we expect meet/beat 2Q, as BAC aggregated credit and debit card data points to 2pts of q/q US eCommerce growth, in-line with estimates. For 3Q, Prime Day results and our BAC data on Fourth of July (see reports) Online spending point to a good start to the quarter, but we still see some risk to margin guide given gas price inflation and industry gross margin pressure," said the BofA analyst. "FX is a big 3Q headwind (not fully in Street ests), but the good news is eCommerce industry comps ease materially going forward."
The analyst lowered second and third quarter top line and margin estimates slightly for FX and reduced fourth quarter and 2023 for FX and lower growth expectations.
"Inflation and recession risk clouds the near-term revenue and margin trajectory, but AMZN remains our top 12-month FANG stock with some downside support (10x 2023 EBITDA = $105 stock price) and ability to benefit from eventual risk on trade. We see easing 2H eCommerce comps, logistics optimization, AWS exposure and depressed margins as key positives vs group. At 11.3x 2023 EBITDA on our new lower estimates, Amazon has an attractive valuation vs history," concluded the analyst.
Elsewhere, a Jefferies analyst told investors he was maintaining a Buy rating on Amazon shares but reducing the firm's price target from $163 to $150 per share.
Jefferies sees Amazon returning to outperformance in the second half of the year as its top-line accelerates and profit improves, supported by a continuation of attractive growth at the highest margin businesses.
"Our SOTP implies minimal value is being ascribed to Core-Retail, suggesting the stock is already pricing-in headwinds from a recession/ inflation. We are cutting our '22/ '23 Op Inc estimates to 20%/ 11% below cons, which we believe now more closely align w/ the buy-side," wrote the analyst.
Amazon stock has climbed 1.8% in early Wednesday trading.