Why Amazon’s stock was higher today
Actions of Amazon (NASDAQ: AMZN) were trading up 3.1% as of 11:58 a.m.ET Tuesday. He walked past the S&P 500 2.1% index gain on a positive day for stocks.
The move follows news from China that its central bank was preparing to ease monetary policy, as well as positive news from GlaxoSmithKline on the effectiveness of its antibody treatment against COVID-19 variants, including omicron and delta. The news has refocused investors on Amazon’s short-term growth engines which have an optimistic analyst around 2022.
Image source: Amazon.
Amazon faces major headwinds in the near term. It expects to incur $ 4 billion in operating costs related to the supply chain and labor shortages in the fourth quarter.
Despite these problems, the company is still in a relatively strong competitive position. Management noted in the last results report that it has been chasing the request for the past two years. He has invested heavily in expanding capacity and paying higher wages, which should lead to better inventory availability to keep customer satisfaction high.
Looking ahead to 2022, one company is bullish on Amazon. Last week, UBS raised its share price target to $ 4,700. Analysts at the company believe revenue growth and higher margins will boost positive investor sentiment as the second half of 2022 approaches.
Amazon has a lot of momentum in cloud services, advertising, and third-party seller business to improve profitability. But it will need to prove to investors that its recent slowing in revenue growth, which stood at a low 15% year-on-year in the third quarter, can reverse and re-accelerate to return to closer pre-pandemic trends. of the 20% level.
Slower growth is one reason Amazon’s stock hasn’t moved much this year, up 8.5% year-to-date. During this time, the competitors are catching up, with Wholesale Costco showing double-digit revenue growth. Shares of Costco are up 43% year-to-date.
Amazon’s forecast calls for fourth-quarter sales growth of between 4% and 12% year-over-year.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. John Ballard owns shares of Amazon. The Motley Fool owns shares and recommends Amazon and Costco Wholesale. The Motley Fool recommends GlaxoSmithKline and the following options: $ 1,920 long calls in January 2022 on Amazon and $ 1,940 short calls in January 2022 on Amazon. The Motley Fool has a disclosure policy.
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