Amazon Stock Holds Steady Amid Resistance: Analysts Suggest Cautious Optimism Ahead of Earnings

StockInvest.us, 3 weeks ago

Amazon Technical Analysis

Amazon.com, Inc. (AMZN) closed at $225.94 on January 17, 2025, exhibiting a positive change of 2.39%. The stock is currently trading close to its resistance level of $226.09, which could limit further upside in the immediate term. With a Relative Strength Index (RSI14) of 49, AMZN hovers in the neutral zone, indicating a balanced momentum and absence of overbought or oversold conditions. The stock's 50-day moving average stands at $216.27 while the 200-day moving average is $191.89, suggesting a strong upward trend over the past several months. The Average True Range (ATR) of 2.28 implies moderate volatility, which traders could expect in the near term.

The MACD (3-month) is slightly negative at -1.31, indicating short-term bearish momentum, although this might not be significant given the stock’s recent bullish movement. The high volume of 41.47 million compared to the average volume of 37.86 million signals increased interest, likely spurred by recent news events and upcoming earnings announcements.

Fundamental Analysis

AMZN's Price-to-Earnings (PE) ratio is 48.8, reflecting a premium valuation consistent with growth expectations for the technology and retail giant. The company has an EPS (TTM) of 4.63, emphasizing its solid earnings capacity. With a market cap of $2.38 trillion, Amazon is a dominant player with strong economic moats in e-commerce, cloud, and media services, among others.

Amazon However, market attention is tinged by the recent suspension of drone deliveries in Texas and Arizona due to safety incidents. This operational hiccup may bring near-term scrutiny and pressure. Nonetheless, the stock has robust long-term potential as evidenced by the DCF valuation of $49.05, far eclipsing the current PE-implied valuations, indicating considerable intrinsic value growth prospects.

Analyst projections are optimistic, with a high target of $270 and a consensus of $239.11, aligning broadly with the current market sentiment driven by 45 buy recommendations.

Next Trading Day and Weekly Predictions

For January 21, 2025, AMZN might test resistance levels around $226.45 while support should hold near $224.92, assuming no major market shifts. In the next week, the focus will remain on any further developments regarding its drone operation, potentially instigating moderate volatility. Investors are also likely to position themselves ahead of the upcoming earnings announcement on February 6. The DCF valuation suggests that AMZN is undervalued at current levels, indicating sound long-term investment potential. The inherent benefits of cloud growth and omnichannel retailing are pivotal to its enduring market leadership.

Overall Evaluation: Hold

Given current technical pressures and recent fundamental news, AMZN can be categorized as a 'Hold'. The stock is experiencing short-term challenges that are not sufficiently critical to undermine its intrinsic strengths and future potential. Monitoring upcoming earnings and operational adjustments will be key to modifying this stance.

Check full Amazon forecast and analysis here.