Goldman Sachs analysts are bullish on Amazon, but not eBay or Etsy – Chewy (NYSE:CHWY), Amazon.com (NASDAQ:AMZN)

Ahead of fourth-quarter earnings season, Goldman Sachs’ Eric Sheridan takes stock of the e-commerce industry.

In an analyst note released Wednesday, Sheridan rated the following companies:

• amazon.com Amazon Give it a buy rating and a price target of $240.
• eBay Inc. eBay Give the stock a sell rating and raise the price target to $55 from $53.
• Chewy Company WHY Give it a buy rating and a price target of $40.
• Essie Corporation ETSY Give the stock a sell rating and lower the price target to $45 from $47.
• Wayfair Corporation watt Give it a neutral rating and a price target of $50.

Main takeaways: Sheridan found solid fourth-quarter results, helped by stronger-than-expected holiday online sales. Non-discretionary and subscription-based purchasing are driving growth, especially among higher-income households.

The analyst is bullish on Amazon and Chewy’s customer loyalty, as well as Amazon’s subscription numbers. Sheridan noted that consumers “marked down” prices at the end of the year.

Sheridan said Goldman’s buy ratings on Amazon and Chewy reflect a “continued preference” for e-commerce companies that are exposed to categories with less discretionary and high repetitive behavior through subscriptions and/or essential purchases. Online spending “remains volatile across discretionary categories and lower-income households.”

Repeat purchases on Chewy and Etsy are lower and driven by “avid” buyers, he added.

Sheridan also believes that by 2025, company profit margins will be dispersed, with Amazon and Chewy becoming beneficiaries, while eBay and Etsy will become losers.

Sheridan expects “differences in profit trajectories” between:

• Companies that can balance strong demand with targeted growth investments and generate attractive incremental profits through revenue exceeding expenses (Amazon, Chewy) and
• For companies where we expect revenue to remain under pressure (eBay, Etsy, Wayfair), the margin outlook may be more challenging “without any additional cost-cutting measures.”

Sheridan expects the online retail company to maintain its commitment to share buybacks in 2025.

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