Sign InSummary
Amazon.com, Inc.'s stock price has decreased slightly but has made significant gains over the year, with positive technical and fundamental indicators suggesting it is undervalued and has potential for further upside, making it a potential buy despite the risks associated with the high PE ratio and pending legal concerns. (Analysis date: June 29, 2023)
Fundamental Analysis
Amazon.com, Inc. (AMZN) ended the trading day on June 29, 2023, at $127.90, marking a decrease of 1.14 (-0.88%). The stock traded within a range of $127.26 to $129.26 during the session. From a yearly perspective, Amazon's share price is significantly off from its year-high of $146.57 but has made excellent gains over the year-low of $81.43.
Amazon's market capitalization stands at around $1.34 trillion, a measure of the company's current market value. There are an approximate 10.26 billion shares outstanding.
The firm posted an EPS (Earnings Per Share) of $0.43, which, in the face of a PE (Price to Earnings) ratio of 303.6, suggests a high earnings expectation baked into the stock's current price. This high PE ratio could be viewed as a sign of over-pricing unless there is a belief in substantial future growth.
Volume was recorded at 19.46 million, significantly down from the average volume of 62.94 million.
The 50 Day Moving Average (116.61) and 200 Day Moving Average (104.20) reveal a positive trend over mid and long-term periods. The fact that the last close price was higher than both averages shows upward momentum.
The Relative Strength Index (RSI 14) of 60 represents a neutral to slightly bullish signal in the near term. The MACD (Moving Average Convergence Divergence) is positive at 3.86, indicating a bullish trend.
Technical Analysis
The discounted cash flow (DCF) analysis suggests a value of $135.84 per Amazon share. This intrinsic value, being above the current market share price, indicates an undervalued stock.
The consensus target suggests a price of $161.55, with a high target of $270 and a low target of $97.78. The median price estimate is $159.50, indicating potentially significant upside potential.
The announcement of Amazon's earnings is scheduled for July 26, 2023, and this could invariably affect the stock's price as it approaches the date.
Relevant News
Amazon being highlighted as a focus of attention for Zacks.com users, Staples accepting Amazon returns as a part of their in-store services, and Amazon considered one of the best-performing stocks in the ongoing bull market signal very positive sentiment towards the company's stock.
In contrast, news about the FTC lawsuit against Amazon over Prime and potential effects on free enterprise could have negative implications for the stock in the short term.
Stock Price Forecast
For the next trading day, June 30, 2023, based on the current momentum, the price is expected to continue its upwards trend while staying in the $127 to $130 range.
Over the following week, given the stock's upward momentum and positive news sentiment, it's anticipated that the price could approach the DCF value of $135.84.
Final Evaluation
Considering the positive technical and fundamental indicators along with the potential upside suggested by both DCF and target prices, Amazon.com Inc.'s stock can be designated as a BUY. It carries some risk considering the relatively high PE ratio and pending legal concerns, but the general trend is optimistic, supported by the news of Amazon's successful market performance and expanded services.
