There's a lot to like about Amazon (AMZN) - Get Report, an analyst from Bernstein who initiated coverage of the online retail giant with a market perform rating late on Thursday, but he remains cautious about the stock.
Shares were down 0.15% to $1,898.17 on Friday morning.
Analyst Mark Shmulik started coverage of Amazon with a $2,050 price target as part of wider initiation of the U.S. internet sector with a general positive outlook.
He said that he saw Amazon facing headwinds, including intensifying competition from big box retailers and Shopify (SHOP) - Get Report, "questionable right-to-play in luxury online goods and grocery, and one-day shipping as more defensive than offensive."
Cloud market growth of over 20% year over year is healthy, he said, though Amazon Web Services is partially challenged by intensifying competition and potential pricing and margin compression
"There is a lot of good here and we like the company and management team," he wrote, "though we remain on the sidelines with respect to the stock until we see more ROIC (Return on Invested Capital) from retail investments and/or Cloud share hold with current economics."
Separately, analyst Youseff Squali at SunTrust Robinson Humphrey wrote late Thursday that Amazon is a favorite of his to own in 2020 and believes that the market is missing the full potential of Amazon's 1-day shipping.
Squali, who has a buy rating on the stock with a $2,350 price target, said "we believe the company can actually sustain, and potentially accelerate its top line growth, given the impact to-date on unit growth, and what we observed in 2005 onward following the launch of free 2-day shipping."
And Cowen analyst John Blackledge said in a Thursday note that "Amazon has several drivers that should yield robust global revenue growth with rising margins the next several years", including further B2C e-commerce market share gains in large retail verticals, emerging e-commerce verticals such as B2B and significant opportunity in existing and newer international markets such as India, Mexico, and Australia.
Blackledge said AWS should enjoy years of secular tailwinds and Amazon advertising, while still nascent, will drive both revenue growth and margin opportunity.
He has an outperform rating and a $2,400 price target on the stock.