Amazon is more resilient, but not immune – Bank of America

Amazon is more resilient, but not immune – Bank of America

Written by Sam Bogda

A Bank of America (BofA) analyst reaffirmed the buy rating and $170 target price on Amazon (NASDAQ:) shares on Monday, saying that Amazon should be more resilient in the face of an economic slowdown but not immune.

The note came on the heels of Amazon’s more than 2% drop on Friday after FedEx (NYSE:) earlier announced its first quarter, highlighting the rapid decline in parcel volumes globally. Raj Subramaniam, FedEx CEO, added that he expects the global economy to “enter a global recession.”

The analyst noted that FedEx also said its business with its two largest customers (Target (NYSE:) and Walmart (NYSE: NYSE) was lower than expected, which BofA sees as “another cautionary data point”) for Amazon.

However, while the analyst said the news is a negative e-commerce reading, they see several reasons why Amazon is less affected than its peers:

1) Amazon no longer ships with Fedex; 2) Amazon has more than 50% of volumes in the US, 3) Amazon likely has a higher average income than Big-3 competitors (Walmart, targeting , EBAY), and we didn’t see any significant trade-offs in the second quarter beyond discretionary items; 4) With the wide selection of third-party Amazon and fast delivery speeds, we expect some stock gains from competitors who may use Fedex,” the analyst wrote.

“Amazon was guided by 9 points from the previous revenue growth acceleration in the third-quarter FX market, and while volumes will not be immune to a recession, we expect to add 3Q strength against the industry due to Prime Day,” he added.

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