Amazon (AMZN) Always Beats Down the Competition, But What Should We Expect for the Holidays?

Amazon (AMZN), unsurprisingly, is a top e-commerce pick for Baird’s top analyst Colin Sebastian. The analyst doesn’t give the stock a glowing review heading into the season of lights, but says fourth-quarter growth expectations should prove conservative.

“Given the broader pull-back within our e-commerce coverage group, we believe mid-to-high-teens ‘Cyber Five’ e-commerce growth would improve sentiment and alleviate some growth concerns into 2019,” Sebastian said. The analyst predicts spending will be stable over the holiday shopping season. Sebastian surveyed online shoppers and with the data he collected, finds most consumers plan to spend around the same amount of money this year on holiday shopping as they did last year, with about 20% expecting to increase their spending this season. He also found Amazon is the first choice for more than half of online consumers.

Sebastian notes AMZN provided weaker-than-expected Q4 revenue guidance. The analyst suggests some investors are concerned over competitive pressure from other online retailers like Target or Walmart, though Sebastian doubts these sites are actually impacting growth. Sebastian adds context — using statistics from Baird’s Hardline Retail analyst, Peter Benedict that show estimates for online Walmart and Target sales will account for less than $16 billion and $5.5 billion dollars (respectively) in comparison to Amazon’s U.S. Gross Merchandise Value of $202 billion for 2018. That’s quite a jump.

“Assuming macro e-commerce growth trends remain stable through Q4 (i.e., mid-teens growth), consensus expectations for Amazon’s top-line growth may prove conservative, implying sequential market share declines and a material drop in Amazon’s share of US e-commerce growth, an unlikely scenario, in our view,” Sebastian concluded.

All in all, Sebastian rates the stock Outperform, with a price target of $2,100, showing an upside of 38%.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Colin Sebastian has a yearly average return of 19.9% and a 63% success rate. Colin has a 41% average return when recommending AMZN, and is ranked #34 out of 4,887 analysts.

Many other analysts are bullish like Sebastian. TipRanks found 36 bulls to be exact – and just one who is sidelined. The consensus price target is $2,165 showing an upside of just about 43%. (See AMZN’s price targets and analyst ratings on TipRanks)


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