Shares of Amazon (AMZN) are down 3% after the e-commerce giant’s stock was hit with a rare analyst downgrade.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Wells Fargo (WFC) analyst Ken Gawrelski downgraded Amazon stock to a Hold equivalent rating and lowered his price target on the shares to $183 from $225 previously. CNBC host Jim Cramer called the downgrade of AMZN stock “shocking.”
Mr. Gawrelski said he sees no near-term upside or catalysts for Amazon stock and expects the share price to be pressured heading into next year. The analyst also said he’s concerned about a rising threat to Amazon’s core e-commerce business from Walmart (WMT), which has been improving its online retail presence.
Multiple Headwinds for AMZN Stock
In his report, Gawrelski said that he sees “multiple headwinds” for Amazon. These also include heavy spending on the company’s fledgling satellite internet business, known as Project Kuiper, and moderating income from its online advertising business. As such, Wells Fargo expects a slow margin expansion for Amazon moving forward.
The downgrade of AMZN stock is extremely rare and comes at a time when many other analysts are revising up their ratings and price targets on the company’s shares. On the same day that Wells Fargo downgraded Amazon, analysts at both JMP Securities and Morgan Stanley (MS) reaffirmed their Buy ratings on the stock and lifted their price targets.
Amazon stock has gained 19% so far this year and is up 41% over the last 12 months.
Is Amazon Stock a Buy?
Wells Fargo is in the minority when it comes to Amazon. The stock currently has a consensus Strong Buy rating among 45 Wall Street analysts. That’s based on 43 Buy and two Hold recommendations made in the last three months. There are no Sell ratings on the stock. The average AMZN price target of $223.02 implies 23% upside from current levels.
