Sign InAmazon Stock Outperforms S&P 500, Analysts Recommend Buy with Undervalued Price Potential
Summary
On September 1, 2023, Amazon's stock closed at $138.12, showing a slight increase and outperforming the S&P 500, with analysts giving a consensus Buy rating and target prices ranging from $103 to $270, indicating potential for price appreciation and a solid investment opportunity.
Overview
Amazon.com, Inc. (AMZN) closed at $138.12 on the NASDAQ on September 01, 2023, which was up 0.08% from the previous trading day. This change outperformed the S&P 500's loss on the day. The price high for the day was $139.96, while the low was $136.875. The 52-week high and low were $143.63 and $81.43, respectively, indicating a substantial price range and inherent volatility in the share price. The market capitalization stood at $1.42 trillion with a trading volume of 39.85 million shares which was shorter than the average volume of 54.88 million shares.
Key Indicators Analysis
The RSI14, a technical indicator of momentum, was 44, suggesting that the stock was neither overbought nor oversold. The MACD line, indicating the short-term trend, was above zero, signalling bullishness. The Moving Average Convergence Divergence (MACD) for the 3-month period was 1.01. The 50-Day Moving Average was $132.72, and the 200-Day Moving Average was $108.95 which demonstrates a bullish trend. Amazon's stop-loss was calculated at $133.04, just below its support level of $134.68.
EPS and PE Ratio
AMZN's earnings per share (EPS) was reported at $1.28, and the price-to-earnings (PE) ratio at 107.91. PE ratios upwards of 20 are typically associated with companies expected to grow earnings quickly, which seems to suggest that shareholders are pricing high earnings growth into the share price.
Analyst Ratings and Target Price
Analysts have a consensus "Buy" rating on the stock, with 36 analysts giving a 'buy' rating and only 4 recommending a 'hold'. Analysts' target prices for AMZN range from a low of $103 to a high of $270, with a median target price of $159.5, all values well above the current stock price.
News and Impact on Stock
Several recent news items could potentially impact AMZN's stock price. Amazon's announcement of its CAPEX exceeding $50 billion in 2023 to enhance AI capabilities signals a strong commitment to expand its tech-driven strategy, which could result in competitive advantages leading to better future performance. Additionally, the company's continued strong earnings growth potential, as mentioned by Chantico Global CEO, also adds a positive sentiment towards the stock. However, the departure of the CEO of One Medical, a year after its acquisition by Amazon, could introduce uncertainty and potential instability within operations, which could be a concern for investors. The near-term impacts of these developments on the stock price are still to be determined.
Discounted Cash Flow and Share Performance
The Discounted cash flow(DCF) calculated value per share for Amazon is around $143.41 which is more than the current closing price indicating value proposition.
Overall Evaluation and Recommendation
Considering Amazon's fundamental and technical analysis indicators along with its future plans for AI capabilities enhancement, and despite recent operational instability following the departure of the One Medical CEO, the overall growth potential suggests a solid investment opportunity. Given the current stock price is lower than the median target price of analysts and the DCF value, the stock seems undervalued suggesting an opportunity for price appreciation. Therefore, it is recommended to categorize AMZN as a "Buy" due to those respective reasons.
