Amazon.com, Inc. (AMZN): An Opportunity To Profit Off Pessimism?

Amazon.com, Inc. (NASDAQ:AMZN) is rated as Outperform by analysts at BMO Capital Markets. The firm was pushed by the stock performance to change their PT view from $2300 to $2250 on February 01. Analysts at The Benchmark Company, maintained the company shares at Buy on January 30 but switched target price from $2100 to $2000. Brokerage firm BofA/Merrill, looks cautious as they stick to prior recommendation of Buy, in a call on January 09. However, they did change the target price from $2000 to $2100. Pivotal Research Group, released new analyst coverage on January 07, calling the stock is Buy.

AMZN stock dropped -0.27% in recent trade and currently has a stock-market value of $830.9B. The shares finished at $1686.22, after trading as low as $1684.34 earlier in the session. It hit an intraday high Thursday at $1702. Trading activity significantly weakened as the volume at ready counter decreased to 2,936,104 shares versus 3,826,025 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 5,147,668 shares. The stock is now 29.01% above against its bear-market low of $1307 on December 24, 2018. It has retreated -21.6% since it’s 52-week high of $2050.5 reached in September. Now the market price is up 6.17% on the year and up 12.27% YTD.

Wall Street’s most bullish Amazon.com, Inc. (NASDAQ:AMZN) analysts are predicting the share price to blow past $2450 per share during the next 12 months. The current median share price forecast by them is $2100, suggesting that the stock could increase 24.54% in that time frame. The average price target of $2122.15 calls for a nearly 25.85% increase in the stock price.

Amazon.com, Inc. (AMZN)’s 50 day simple moving average (SMA 50) price is $1640.99 and its 200-day simple moving average (SMA 200) price is $1729.14. The company’s stock currently has a total float of 411.82M shares. Its weekly volatility is hovering around 1.76% and felt 1.64% volatility in price over a month. On the upside, the share price will test short term resistance at around $1697.37. On a downside, the stock is likely to find some support, which begins at $1679.71. The failure to get near-term support could push it to $1673.19.

When looking at valuations, Amazon.com, Inc. (AMZN) has a pricey P/E of 85.02x as compared to industry average of 61.33x. Moreover, it trades for 42.49 times the next 12 months of expected earnings. Also, it is trading at rather expensive levels at just over 18.97x price/book and 3.57x price/sales. Compared to others, Amazon.com, Inc. is in a different league with regards to profitability, having net margins of 4.3%. To put some perspective around this, the industry’s average net margin is 6.34%. AMZN’s ROE is 27%, which is also considerably better than the industry’s ROE of 16.56%. It’s also very liquid in the near term, with a current ratio of 1.1. The stock has a debt/capital of 1.13.

Shares of AMZN have dropped -1.6% since the company’s most recent earnings report. Over the past 12 fiscal quarters, Amazon.com, Inc. (NASDAQ:AMZN) has topped consensus earnings estimates in 10 quarters (83%), missed earnings in 2 quarters (16%), whereas at 0 occasion EPS met analyst expectations. AMZN last reported earnings that exceeded expectations. The company raked in $6.04 per share, -15.17% change on the same period last year. That was better than consensus for $5.64. Revenue for the recent quarter stood at $72.38 billion, up 20% on last year and above the $71.87 billion predicted by analysts. For this quarter, Wall Street analysts forecast revenue in a range of $58.29 billion to $60.41 billion, which should be compared with $60.46 billion generated last year. EPS is seen in a range of $3.08 to $6.28, against the $2.51 reported a year ago.