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Amazon Named Cowen's Top Megacap Stock Pick for 2022

'We forecast Amazon's e-commerce revenue to accelerate starting in the second quarter of 2022,' said Cowen analyst John Blackledge.
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Cowen has named Amazon  (AMZN) - Get Amazon.com, Inc. Report its top megacap stock pick for 2022, based on the retail/technology giant’s strong fundamentals.

“We forecast AMZN's e-commerce revenue to accelerate starting in the second quarter of 2022, as it starts to lap easing comparisons,” Cowen analyst John Blackledge wrote in a commentary.

“Also, given the historic fulfillment and logistics infrastructure investments of the past two years, we expect improvement in the Prime one-day/same-day delivery offering, which should lift purchase conversion rates”

Blackledge also anticipates strong growth for Amazon in advertising and its cloud platform, Amazon Web Services.

“We expect operating-margin expansion, driven by 12% incremental operating margins,” he said. That will be weighted toward the second half of the year, as Amazon digests higher labor costs through the first half and comparisons ease in the second half.

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“We expect overall margin expansion to be driven entirely by AWS and advertising, as we expect the rest of the business to post a $5 billion operating loss,” Blackledge said.

Amazon stock recently traded around $3,406, down 1.1%.

Morningstar analyst Dan Romanoff is bullish on the company, too, putting fair value at $4,100.

“The company continues to rapidly add capacity in order to meet customer demand and one-day delivery,” he wrote in an Oct. 28 commentary.

“Amazon remains well positioned to prosper from the secular shift toward e-commerce and the public cloud over the next decade. But we do see a modest reset in terms of growth and profitability through the next several quarters.”