Amazon (AMZN) “well positioned” – still JPMorgan’s best idea

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JPMorgan analyst Doug Anmuth said Amazon (NASDAQ: AMZN) appears “well positioned” in a note to clients on Internet stocks on Monday.

Anmuth told investors that the e-commerce giant retains a 40% share of the U.S. e-commerce market and “seems well positioned after doubling its fulfillment network and headcount since the start of the pandemic, while speeds faster delivery times, higher inventory levels, & earlier timing of holiday promotions should drive demand.”

“AMZN remains our best idea, but of course it is also subject to macroeconomic headwinds, as evidenced by the company’s Q4 revenue outlook,” the analyst wrote. “We estimate that AMZN’s share of US e-commerce rose about 240 bps Q/Q (Prime Day likely helped) as AMZN’s online stores rose +13% FXN Y/Y in 3Q and AMZN seller services (3P) grew +23% FXN Y/ Y in 3Q.”

However, the analyst noted that Amazon cited slowing demand trends later in the third quarter, and that macroeconomic pressures could weigh on consumer discretionary spending in the fourth quarter.

Still, JPMorgan sees Amazon’s high inventory levels as an advantage during the holiday season, adding that the company “also has the advantage of 3P sellers.”

“Long term, we continue to believe that U.S. e-communication penetration can reach 40%+ of adjusted U.S. retail sales as AMZN and other retailers gain share in categories under-penetrated keys such as groceries, GIC, clothing and accessories, and furniture appliances/equipment,” Anmuth added.

By Sam Boughedda

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