Amazon.com, Inc. (NASDAQ:AMZN) shares are down 9% over the last month, but WestPark Capital analyst Curtis Shauger sees a buying opportunity in the stock's recent pullback.
Expert Ideas: Shauger initiated coverage on Amazon stock with a Buy rating and $280 price target based on the company's dominance in e-commerce and Amazon Web Services' top position in the "infrastructure as a service" market.
The firm estimates Amazon's general merchandise value to be nearly $1.3 trillion in 2024, nearly four times the size of Shopify's and 13 times the size of Walmart's GMV.
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Shauger also pointed to AWS revenue growth of 20% in 2024 and 36% EBIT margins as top of the class in the IAAS market. WestPark estimates AWS is nearly double the size of Microsoft's Azure and nearly triple the size of Alphabet's Google Cloud Platform.
Amazon's recent pullback offers a "unique opportunity" as the stock now trades at valuation multiples near all-time lows, approximately 12 times EBITDA basis, the analyst said.
Shauger sees the multiple improving with continued improvement in e-commerce margins, moderation in capital expenditures or an improvement in growth.
The firm's $280 price target is based on a 15 times multiple and an EBITDA estimate of $205 billion.
"We believe AMZN will trade up to the mid point of its recent historical range as the inherent profitability of its model continues to show through," Shauger said.
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