Shares of Amazon.com have lagged the broader market in 2021.
Patrick T. Fallon/AFP via Getty Images
Shares of Amazon.com have lagged the broader market this year. It’s not just Barron’s that is bullish on the stock heading into 2022; an analyst at Monness Crespi Hardt sees about 33% upside for shares.
Analyst Brian White reiterated his Buy rating and $4,500 price target in a note on Monday. Amazon stock closed down 0.8% to $3,393.39 on Monday, while the S&P 500 index was up 1.4%. Amazon shares are up only 4.2% in 2021, well behind the S&P 500 index’s 28% rise.
“After a strong stock performance in 2020, Amazon has trailed this year’s healthy market rally; however, we believe the company’s fortunes are poised to change in 2022,” White wrote. “In our view, Amazon is uniquely positioned to exit this crisis as one of the biggest beneficiaries of accelerated digital transformation.”
Amazon’s flagship e-commerce business gets plenty of attention, but White is especially upbeat about the company’s Amazon Web Services business. He points to expansions beyond its core public cloud to solutions that support on-premises configurations, the internet of things, and other projects.
He thinks the stock’s growth path is very attractive, across e-commerce, AWS, digital media, advertising, Alexa and more.
“Moreover, the company has started to deliver more attractive profit trends over the past couple of years,” White wrote. “However, as Amazon continues to aggressively invest back into the business to grow at a rapid rate, the company’sprofitability is well below its long-term potential. Therefore, we believe traditional P/E metrics are not applicable, nor other profit metrics, thus we value the stock on an enterprise-value-to-revenue ratio.”
Amazon stock was among Barron’s top stock picks for 2022. While the stock isn’t cheap, its fast-growing businesses like AWS and advertising have the high margins to warrant more optimism.
Write to Connor Smith at [email protected]
