CA - Amazon: Why I'm Bullish But Uncomfortable Buying Now
2024-06-18 12:33:48 ET
Summary
- I had rated Amazon a 'Neutral/Hold' last June but upgraded it to a 'Buy' at the end of Jan this year, capturing +3.96% in active return.
- Now, I'm revising that to a 'Neutral/Hold' again as I note merely adequate growth in its E-commerce segment and reasons to be cautious given the proximity to 4-monthly resistance levels.
- This is balanced by my bullish outlook on AWS, which I think is well-poised for growth reacceleration as enterprises increase their tech spend allocations.
- I also think we will see further margin expansion in the stock as the company implements a host of improvements in logistics and advertising, benefiting e-commerce EBIT margins.
- On the risks side, higher capex and equipment lease expenses are expected to generate AWS growth. I am watching the AWS margin and overall FCF figures for signs of downside surprises.
Performance Assessment
My last article update on Amazon.com, Inc. ( AMZN ) was a year ago. I had held a 'Neutral/Hold' stance as I was concerned about the growth prospects. However, 6 months later, just before Q4 FY23 earnings, I changed my stance to a 'Buy':
Communication of Author's Change in Stance (Author's Last Article on Amazon, Seeking Alpha)
