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As of the date of analysis, August 18, 2023, Amazon.com, Inc. (AMZN) is labeled as a Hold due to its vast market capitalization, positive trend indicated by moving averages and MACD, and a notable partnership with Blue Shield, but investors must be cautious of share erosion to Walmart, high PE ratio, ongoing strike, and market factors.
Fundamental Analysis
Amazon.com, Inc. (AMZN) is currently valued at a market capitalization of approximately $1.37 trillion. The company boasts an earnings per share (EPS) value of $0.42. Notably, AMZN's price-to-earnings (PE) ratio is fairly high, at 319, suggesting that investors might perceive growth potential or the shares are potentially overvalued.
Investors and traders usually take a keen interest in the average trading volume of a stock. Amazon's average trading volume is recorded at around 59.24 million shares. However, the last trading volume recorded was slightly less than the average at 47.23 million shares traded.
The company’s highest and lowest price recorded for the past year were $143.63 and $81.43, respectively. This is indicative of the stock's volatility over the past year, as it has experienced a drastic price range shift.
Amazon recently caught attention due to a significant deal hit with Blue Shield of California. The details of this deal, including the financial implications, were not divulged, but it has potentially boosted investor confidence. Part of its online pharmacy offering, this deal makes Amazon a major part of a new prescription drug model for Blue Shield of California.
On the downside, Amazon had experienced share erosion to Walmart who reported solid eCommerce sales for Q2 and mentioned they're gaining share from Amazon.
Technical Analysis
The technical indicators show that Amazon's 50-day moving average is $130.73, while its 200-day moving average stands at $106.75. Given that the last closed price was $133.98, which is above these two averages, it can suggest a positive trend in the company’s stock.
With an RSI14 of 53, the stock is modestly away from overbought territory, which usually starts from an RSI above 70. A three-month MACD of 1.91 suggests that investors are feeling optimistic about the stock's short-term performance.
The daily trading price range of Amazon's stock is determined using the Average True Range (ATR), which stands at 2.66. This value is a measure of volatility and gives traders an insight into what to expect in terms of price shifts. Meanwhile, the stock has a support level at $130 and resistance at $134.3.
Experts seem divided on the stock's performance, with some recommending a "Buy" rating (36 analysts) while others recommending to "Hold" (4 analysts). No experts had a “Sell" rating for Amazon's stock. The high, low, median and consensus target estimates are $270, $103, $159.5 and $162.6, respectively. The Discounter Cash Flow is $139.27, indicating an optimistic future performance.
Regarding projected performance, the forecast for the next trading day, August 18, 2023, is difficult to make, as it involves a fair amount of speculation influenced by myriad factors. However, an increase or decrease is expected within the range of $2.66 given the ATR value.
Evaluation
Given the vast market capitalization of Amazon, a newly formed notable partnership with Blue Shield, and the positive trend suggested by the moving averages and the MACD, Amazon is labeled as a "Hold." This label indicates the stock has potential in the long run, but investor must pay close attention to the share erosion to Walmart and market factors. However, the high PE ratio and the ongoing strike from the Writers Guild of America could pose as potential headwinds for the company. Therefore, investors should closely monitor these factors and update their analysis periodically.
