Consumers are tightening their wallets and are concerned about the prospect of a recession; that was evident in a recent proprietary survey regarding the U.S. Online Shopper, undertaken by investment bank Evercore.
Firm analyst Mark Mahaney notes that 58% of consumers said they believe their retail spend over the next 6–12 months will drop while only 8% anticipate their spend will rise. 34% believe it will stay the same. More than 90% believe a recession could be on the way. Of these, 54% think the odds of a recession are “very likely” while 37% believe it is “somewhat likely.”
This is obviously bad news for e-commerce giant Amazon (AMZN).
Given the survey’s findings, Mahaney has lowered his 2023 revenue outlook by 8% and 2023’s Operating Income forecast by 10%. That said, the reductions are macro-based as the survey actually points to how strong Amazon has become.
“Despite the post-Covid reopening of economies and the fear that Amazon could be losing share to other retailers as consumers spend more time outside their homes, our survey results across a variety of metrics suggest that Amazon continues to maintain its leadership position in Online Retail, and its competitive moats may be deepening (yes, we are referring to fast & free shipping),” the analyst noted.
Amazon is used by 94% of those surveyed – the “highest level” tracked by Evercore during the past eight years. Amazon also offers the lowest prices, according to 60% of respondents – the same as last year. 84% believe the company also offers the best selection, with 79% also claiming shopping with Amazon provided the most convenient experience.
As such, Amazon remains one of Mahaney’s “top picks among Mega Caps.” The analyst rates the stock an Outperform (i.e., Buy) along with a $180 price target. The figure makes room for one-year gains of 59%.
It turns out that the rest of the Street wholeheartedly agrees with the Evercore analyst. With 36 Buy ratings vs. 1 Sell and 1 Hold, the message is clear: AMZN is a Strong Buy. Possible gains of 56% could be heading investors’ way should the average price target of $177.05 be met over the next 12 months.