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An Amazon fulfillment center.
AFP via Getty Images
Amazon.com
the stock was down Monday after Morgan Stanley analysts lowered their price target, saying a push by the online retailer and tech giant to increase its logistics workforce was increasing pressure on profits .
Amazon (ticker: AMZN) fell 1.97% to $ 3,358.04. Higher bond yields also hit the stock on Monday, as they were other fast-growing tech stocks. The
Nasdaq
was down 0.38%.
Morgan Stanley analysts reduced their price target to $ 4,100 from $ 4,300. They maintained their overweight rating on the stock.
Analysts polled by FactSet also rate the stock at Overweight but with a higher average target price of $ 4,153.
“We have written in the past about how AMZN’s growing logistics workforce is configured to enable more e-commerce share gains, faster delivery speeds (1 day and same day) and new business opportunities (like third-party logistics)… but the cost of labor is increasing, ”wrote the analysts, led by Brian Nowak.
The analyst lowered his EBIT estimates for 2021 and 2002 on Amazon by 16% and 19%, respectively.
Amazon announced in mid-September that it was hiring more than 125,000 drivers and warehouse workers and would pay them an average starting salary of over $ 18 an hour – and up to $ 22.50 in some. places.
The company has been on a hiring wave. In early September, the company announced it would fill 40,000 business and technology positions; since the start of the pandemic in March 2020, Amazon has hired more than 450,000 people in the United States
“Short-term estimates are going down… but in our opinion, it’s also important to remember that rising wages have an impact on all businesses (most recently
FedEx
(FDX) last week) and AMZN’s competitors, ”analysts said.
Barron reported last week how inflation in labor costs appeared to be weighing on the profit margins of shipping giant FedEx.
“We recognize that shortfalls and slowing revenues can hamper AMZN’s ability to outperform throughout this investment cycle,” Morgan Stanley wrote. “In our view, AMZN could be tactically constrained until retail revenues can re-accelerate and exceed expectations” in the first half of 2022.
Write to Joe Woelfel at [email protected]
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