The stock was lower Monday after Morgan Stanley analysts lowered their price target. They said pressure from the online retailer and tech giant to expand its logistics workforce increased profit pressure.
Amazon (ticker: AMZN) fell 1.97% to $3,358.04. Higher bond yields also hit equities on Monday, as they were other high-growth technology stocks. The
decreased by 0.38%.
Morgan Stanley analysts lowered their $4,100 price target from $4,300. They maintained their Overweight rating for the stock.
Analysts polled by FactSet also rate the stock as Overweight, but with a higher average price target of $4,153.
“We have written in the past how AMZN’s growing logistics workforce will drive greater e-commerce share gains, faster ship speeds (1 day and same day), and new business opportunities (such as third-party logistics)…but the cost of labor is rising,” wrote the analysts, led by Brian Nowak.
The analyst lowered its 2021 and 2002 EBIT estimates for Amazon by 16% and 19%, respectively.
Amazon announced in mid-September that it was hiring more than 125,000 drivers and warehouse workers and will pay them an average starting wage of more than $18 an hour — and up to $22.50 in some places.
The company is looking for staff. In early September, the company announced it will fill 40,000 jobs in business and technology; Since the pandemic began in March 2020, Amazon has hired more than 450,000 people in the US
“Short-term estimates are going down… but in our opinion it’s also important to remember that rising wages affect all businesses (most recently
(FDX) last week) and AMZN competitors,” the analysts said.
Barron’s reported last week how labor cost inflation appeared to be biting profit margins at shipping giant FedEx.
“We recognize that lost profits and slowing sales may hinder AMZN’s ability to outperform this investment cycle,” Morgan Stanley wrote. “In our view, AMZN could be tactically tied to range in the first half of 2022 until store sales can once again accelerate and exceed expectations.
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