While BofA's credit and debit card data showed U.S. online spending accelerated 20bps to +3.5% year-over-year in August, the acceleration on easier comparables has lagged the firm's expectations for more explosive growth.
BofA's reset on e-commerce: "Multiple recent indicators suggest a weakening outlook for discretionary consumer spending including; 1) higher than expected peak interest rates from the Fed; 2) a negative fiscal 1Q pre-announcement from FedEx; 3) a sharp decline in CarMax sales due to “affordability challenges” for consumers and; 4) the first MoM decline in the Case Shiller home price index since January 2019."
The firm reiterated a Buy rating on Amazon (AMZN) and Neutral rating on eBay (EBAY) amid the new macro backdrop that is forecast to pressure international revenue for both e-commerce giants even with currency hedges in play. Amid a more cautious view on Q4 and the first half of 2023, the price objective on AMZN was clipped to $157 from $170, while the PO on eBay (EBAY) was cut to $44 from $54.
Lower valuations broadly in the tech sector were also a factor in the price objective drops by BofA on the two e-commerce stocks.