Sam Boughedda

In a Wednesday note to clients, Daniel Salmon from BMO Capital Markets reiterated Amazon’s (NASDAQ:), as his top megacap pick.

After the company’s recent approval of a 20-for-1 stock split they set a price target of $172.50. The analyst stated that Amazon would outperform the market in the second half.

“Macro restrictions (labor fluctuation, higher fuel and steel prices, or board for containers)” Salmon wrote that while there is short-term uncertainty and mid- to long-term opportunities to create positions before margin reexpansion, they have also created macro constraints (labor fluctuations, higher prices for steel, fuel, container board etc.

Salmon believes that consolidated margins must continue to increase over the long and short term, as high-margin businesses drive revenue growth.

“Labor optimization has begun, and FC overcapacity will be absorb by the holiday period. He said that once these headwinds are gone, AMZN should be able to resume its leadership role in the secular shift towards enterprise cloud services and consumer ecommerce.

Amazon shares dropped 1.5% Wednesday