© Reuters. Amazon (AMZN) Top Mega Cap Pick at BMO Following Stock Split
By Sam Boughedda
BMO Capital Markets analyst Daniel Salmon reiterated Amazon (NASDAQ:) as the firm’s top mega-cap pick in a note to clients on Wednesday.
The analyst, who set a new price target of $172.50 on the stock following its recently approved 20-for-1 stock split, said they feel Amazon will outperform in the second half of the year.
“Macro constraints (labor fluctuations, higher prices for steel, fuel, container board, etc.) have created short-term uncertainty, but mid to long-term opportunity to build positions ahead of margin re-expansion,” wrote Salmon.
However, according to Salmon, consolidated margins should continue to expand over the mid to long term as higher-margin businesses increasingly drive revenue growth.
“Labor optimization is underway, and we expect FC overcapacity to be absorbed by holiday season. Once clear of these headwinds, we expect AMZN’s position leading the secular shift to consumer e-commerce and enterprise cloud services should return to the fore,” he added.
Amazon shares have dipped 1.5% Wednesday.
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