Amazon Stock Analysis: Mixed Technical and Fundamental Signals Suggest 'Hold' Strategy

StockInvest.us, 1 month ago

Amazon Technical Analysis

Amazon.com, Inc. (NASDAQ: AMZN) closed at $187.23 on June 11, 2024, with a minor increase of 0.09%. The stock's price ranged between $184.54 and $187.77 during the day, establishing a support level at $185.99 and a resistance at $188.70. The Relative Strength Index (RSI14) stands at 59, indicating the stock is neither overbought nor oversold. The 50-day and 200-day moving averages are $182.78 and $158.59 respectively, showing a current upward trend. However, the MACD (3-month) of -1.95 reflects some short-term bearish momentum. The Average True Range (ATR) values at 1.90, suggesting moderate volatility.

Fundamental Analysis

Amazon holds a market capitalization of $1.95 trillion, with an EPS of 3.58, translating to a PE ratio of 52.47. This high PE ratio indicates significant investor confidence in Amazon's future growth despite relatively high earnings multiples. The DCF valuation stands at approximately $50.12, signaling that the stock is trading significantly above its intrinsic value derived from its cash flow analysis. Upcoming earnings on August 1, 2024, will provide further insight into the company's financial health.

Stock Performance Prediction

Amazon For the next trading day and week, Amazon's stock performance is expected to face challenges breaking its immediate resistance at $188.70. An increase in volume closer to its average of 38.84 million could potentially drive the stock past this resistance, especially if positive sentiment prevails in the tech sector. However, a drop below the $185.99 support could indicate short-term weakness.

Intrinsic Value and Long-Term Investment Potential

The intrinsic value derived from DCF suggests that Amazon is currently overvalued. However, long-term growth prospects remain strong, backed by Amazon's continued innovations such as the cashierless checkout system, and its position in the burgeoning AI market. The company's large market cap and substantial cash flows bolster its long-term investment thesis despite short-term overvaluation concerns.

Overall Evaluation

Considering both technical and fundamental factors, Amazon appears more suited as a 'Hold' candidate. The stock demonstrates robust long-term growth potential and enjoys strong investor confidence, yet current short-term valuations are high, and key resistance levels could cap immediate price gains. Monitoring upcoming earnings and technological advancements will be crucial for future evaluations.

Check full Amazon forecast and analysis here.