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In a research note on U.S. e-commerce stocks Friday, Goldman Sachs analysts told investors they see the most attractive risk-reward skew in Amazon (NASDAQ:AMZN).
However, they warned that the company’s fiscal Q4 2022 EPS is critical for Amazon’s management to “frame the multi-year pathway on a return to more normalized eCommerce margins as we move further from the demonstrable headwinds from the past 2 ½ years.”
The analysts explained that Amazon continues to reflect the firm’s “preference for: a) profitable and scaled players with higher growth profiles, b) resilient models supported by platform breadth, category diversification and more favorable end-market exposure, and c) our expectation of continued market share consolidation within eCommerce over time.
“We adjust our estimates in a number of ways to reflect our broader industry work and inject greater levels of conservatism in forward estimates: 1) lowering the growth profile for AWS (cloud computing) to +21% YoY growth in Q4 with further deceleration into 1H 2023; 2) continued modest assumptions for Int’l eCommerce growth (especially driven by European exposure); and 3) lowering our 2023 GAAP Operating Income assumptions to $22bn in 2023 and $31bn in 2024,” the analysts write.
Goldman Sachs also notes that Amazon has seen positive trends in its unique visitors/viewers count in recent months.
Amazon shares are up 2% Friday.
