Stock Analysis & Ideas

Here’s Why Amazon (NYSE:AMZN) Is Expected to Outperform Its Peers

Story Highlights

Amid growing fears of a worsening recession, let’s take a look at the future of the e-commerce and retail giant Amazon.

The street is wondering what’s in store for Amazon (NYSE:AMZN) with the recent hike in shipping rates announced by FedEx (NYSE: FDX) and its disappointing results and profit warning last week. Bank of America Securities analyst Justin Post remains bullish on Amazon despite the recessionary fears and expects the company to outperform its peers.

Post believes that Amazon is susceptible to global recessionary pressures but will not be as severely impacted as FedEx.

The analyst highlighted that Amazon does not use FedEx’s shipping services. Rather, Amazon has an edge compared to its peers who are using FedEx services and may win market share gains from them.

Further, a majority of volumes for Amazon (more than 50%) come from the U.S., while FedEx suffered a maximum slowdown in the regions of Europe and Asia.

In addition, its customers belong to the higher-income average consumer bracket versus its peers, lowering the chances of spending cuts.

Post has a Buy rating on Amazon with a target price of $170 (49.41% upside potential).

What is the Prediction for Amazon’s Stock in 2022?

Overall, the Wall Street community also continues to be optimistic about the stock. The stock commands a Strong Buy consensus rating based on 37 Buys and one Hold. Amazon’s average price target of $177.05 implies 55.61% upside potential from current levels.

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To add to that, TipRanks’ Stock Investors tool shows that investors currently have a Positive stance on Amazon, with 1% of investors on TipRanks increasing their exposure to AMZN stock over the past 30 days.

Concluding Thoughts

The pandemic superstar stock, Amazon, is off from its $185 peak levels seen less than a year ago. It is now trading at $115 levels. The current share price weakness resulting from an uncertain macro backdrop presents a great buying opportunity for investors with a long-term investment horizon.

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