© Reuters. Amazon (AMZN): BofA sees a tough setup for 2023, expects year to end better than it starts
By Senad Karaahmetovic
Bank of America slashed the price target on Amazon (NASDAQ:) to $135 per share as it sees a tough setup for the stock, especially in the first half of 2023.
Consumer and corporate spending cuts are expected to exert pressure in Q1 but BofA remains positive about Amazon stock’s performance in subsequent quarters.
“BofA economists expect inflation to fall below 3% exiting 2023, and we think a more favorable consumer spending environment, & prospect of lower interest rates can lead to multiple expansion in 2023,” analysts at the bank wrote in a client note.
They believe that several headwinds from 2022, which pushed shares lower, could reverse this year. This, coupled with elevated capex cuts, fuels the reiteration of a Buy rating on Amazon stock at BofA.
“Our still-positive view on stock is based on: 1) share gains in retail, positioned for shift back to goods spend, 2) potential to resize capacity and improve retail margins, 3) strong market position in Cloud, and 4) strong profit centers in model (3P, advertising, AWS),” the analysts added.
They estimate Amazon will generate revenue of $560 billion and a GAAP profit of $20B in 2023, which compares to consensus for revenue of $562B and a GAAP profit of $19.8B. On the other hand, BofA is below Street on AWS revenue and margins.
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