Is AMZN still a buy?

After hosting a webinar with an eCommerce expert, Roth MKM analyst Rohit Kulkarni has maintained his “Buy” rating on Amazon (Amazon Stock Quote, Chart, News, Analysts, Financials NASDAQ:AMZN).

“Last week, we hosted an expert webinar with a 25-year veteran in ecommerce. We discussed a variety of topics involving Amazon, Shopify, Temu, Shein, and macro forecasts. In all, the speaker sounded optimistic on how 3P seller outlooks have turned more positive on a YTD basis, and how AMZN still has a way to go as far growing retail profitability and market share is concerned.”

Kulkarni says the experts believes that Amazon’s regionalization of its distribution centers has been a “smashing” success and that this will continue with the building of as many as fifty more of them.

The expert noted that Shein and Temu has been aggressive competitors, but believes AMZN has made the right investments to fend off these attacks.

Lastly, the expert believes that the outlook for eCommerce as a whole is still very strong.

“Despite economic ups and downs, ecommerce platforms are beefing up their offerings, and shoppers are keeping their wallets open,” the analyst noted. “This year, it’s all about boosting profit margins faster than sales, mainly through smarter supply chain moves and better inventory turnover. The speaker gave a shout-out to Walmart’s strategy as a solid middle ground between Target’s store-based delivery and Amazon’s warehouse approach. The speaker also mentioned that consumer spending is holding steady thanks to folks leveraging credit for online buys.”

In a research update to clients April 16, Kulkarni maintained his “Buy” rating and price target of $205.00 on AMZN.

The analyst thinks Amazon will post EPS of $3.93 on revenue of $627.5-billion in fiscal 2024. He expects those numbers will improve to EPS of $5.00 on a topline of $682.6-billion the following year.

“Our sum-of-parts valuation implies $2.17tn market cap ($810bn for Retail, $980bn for AWS, and $430bn for Advertising/Other), and our $205 PT implies approx. 14x ‘25E EBITDA. We believe this methodology appropriately attributes value across Amazon’s three business segments with different growth and margin profiles,” he concluded.