Amazon Stock: Should You Buy It in November 2022?

Amazon  (AMZN) - Get Free Report shares have been struggling to keep their value amid the stock market sell-off. That's especially the case following the company's third-quarter (Q3) earnings release.

Rampant inflation has trimmed the margins of Amazon's retail segment. That's led to the depletion of the company's operating cash flow.

And despite Wall Street’s bullishness toward the stock, things have just gotten worse. Amazon Web Services (AWS), which many analysts thought was an inflation-proof cash cow, has finally shown signs of fatigue.

Still, analysts argue that Amazon’s fundamentals remain intact. If so, this makes the stock a bargain at its current price.

Here's why November could be the time to join the Amazon bull club.

A Solid Buy-and-Hold Thesis

Despite every macroeconomic headwind Amazon is facing in 2022, analysts are confident that the company is still poised for long-term growth.

According to Raymond James’ Aaron Kessler, e-commerce growth prospects and cloud industry momentum are some of the reasons he remains bullish on AMZN.

“While we expect a more challenging growth outlook near-term, we remain positive on long-term growth for both retail and AWS with improving margins over time as Amazon focuses on productivity improvements,” Kessler said.

Telsey’s Joseph Feldman seems to endorse the Raymond James analyst’s thesis, adding that Prime members’ high loyalty is likely to keep fueling the Amazon ecosystem. That should “enable the company to remain a share gainer over time,” he said.

Cheaper, but Not the Cheapest

In terms of valuation, November could be an interesting entry point for investors looking to acquire some AMZN shares. The company’s price-to-earnings (P/E) multiple has been at its lowest point since mid-2021, indicating the stock is cheaper than usual.

Another valuation multiple that corroborates with Amazon’s long-term prospects is the company’s EV/EBITDA (enterprise value to earnings before interest, taxes, depreciation, and amortization).

According to Seeking Alpha’s database, Amazon’s EV/EBITDA for the trailing 12 months (TTM) was nearly 20.0. This same multiple is expected to drop to 14.6 for the 12 months forward.

If so, this would mean that Amazon is projected to grow its EBITDA faster than its enterprise value is expected to increase — which translates to a cheaper stock in the future.

What’s AMZN's Price Target?

Wall Street is considerably less bullish on Amazon's stock than they were two weeks ago.

Before the Q3 earnings disclosure, the average price target on Amazon was $170. After the conference, the average target fell to $140.

In fact, Telsey’s Joseph Feldman's price target for AMZN is the same as the market average. The analyst rated the stock as a buy with a $140 target (which he has downgraded from $150).

Aaron Kessler’s price target dropped even more drastically: The Raymond James analyst lowered his target from $164 to $130.

As Wall Street grows less bullish on the stock and investors become more careful in inflationary times, investors may find favorable opportunities during the sell-off.

Still, it's important to remember that Amazon's stock can drop even more sharply in the upcoming months.

Therefore, any investor willing to purchase some AMZN shares should know their own risk profile.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Amazon Maven)