- Credit Suisse reiterated its Outperform rating on Amazon.com Inc (NASDAQ:AMZN), leaving its price target unchanged at $4,100 (38.3% upside) ahead of its Q1 FY22 results.
- Amazon had spent more money on e-commerce-focused CapEx in the last two years than it has in the prior decade preceding the pandemic, with greater willingness to own fulfillment/transport assets. It looked to insource more of its delivery to drive savings vs. outsourcing to couriers at their markups.
- The re-rating was backed by 1) e-commerce segment operating margin expansion as it grows into its more extensive infrastructure, 2) optionality for faster-than-expected FCF growth vis-à-vis its advertising segment, and 3) upward bias to AWS revenue forecasts and likely more moderate deceleration path as suggested by the ongoing capital intensity in the business.
- Credit Suisse added MGM, updated the cap structure, moved Prime Day into 3Q22, and added surcharges to FBA to arrive at the valuation.
- Price Action: AMZN shares traded lower by 2.53% at $2,890.46 on the last check Friday.
