Amazon Takes Off As May Arrives
Amazon (AMZN) stock was trading at around $616.11 per share at 9:30 AM on Thursday, 28 April. Then something incredible happened at 4 PM – the stock shot up as high as $681.09 after Q1 earnings, before retreating to its current trading price of $659.59 at the end of April 2016. This means that the stock will enter the month of May on a high note. For the year to date, Amazon.com Inc. has shed 2.41%, since it started on January 1 at $686.08. From January through 9 February, the stock plummeted and hit a low of $482.07 on 9 February, as indicated by the deep trough on the above chart. Since then however, it has been a relentless march back to prosperity indicated by the sharp spike that took place in the final two trading days of April 2016.
Above Chart – Amazon.com Inc., Income Statement
Analysts have given Amazon.com Inc. a resounding nod of approval with a mean recommendation for this week of 1.8. On a rating scale of 1.0 (strong buy) to 5.0 (strong sell), the stock is firmly bullish. In terms of the high price target for the stock, it is $900 and the low price target is $625. Analysts from Thompson/First Call are clearly going long on Amazon.com given its recent performance. If we take a look at the upgrades/downgrades history of the stock, it paints a mixed picture with 2 downgrades by major research firms and 2 upgrades initiated.
This is the history of the upgrades/downgrades for Amazon.com Inc.:
- On 4 January 2016, Monness Crespi & Hardt downgraded Amazon.com stock from a buy to a neutral rating
- On 15 January 2016, Susquehanna initiated a positive rating for Amazon.com stock
- On 18 February 2016, Canaccord Genuity upgraded Amazon.com stock from a hold to a buy rating
- On the 22nd of March 2016, Raymond James downgraded Amazon.com stock from a strong buy to and outperform rating
What are the Experts Saying about Amazon.com Inc, (Nasdaq: AMZN)?
The recommendation trends are equally interesting in that the number of strong buy options has declined in recent months, but the number of buy options has steadily increased. Thompson/First Call analysts do not recommend that investors sell Amazon.com stock. At its current price, the company is worth $285.60 billion, and the price/earnings ratio is 485.26, with an earnings per share of $1.30. Despite its positive performance, Amazon.com is rated as a hold by experts. There are a mix of factors that have gone into this rating, including the following strengths:
- Revenue growth is positive
- Net income has been strong
- EPS growth has been phenomenal over time
The weaknesses evident in Amazon.com stock include the following:
- The company has sub-optimal cash flow
18% of shares in Amazon.com Inc. are held by 5% owners and insiders. 68% of shares are held by mutual fund owners and institutional owners, and 82% of the float is held by mutual fund owners and institutional owners, with some 1,284 institutions owning shares of Amazon.com Inc. The major direct holders as at February 16th 2016 include Jeff Bezos with 82,914,385 shares, followed by Diego Piacentini with 109,146 shares. The top institutional investors include Capital World Investments with 4.70% of shares, Vanguard Group Inc. with 4.67%, Price T Rowe Associates Inc. with 4.40% and FMR, LLC with 3.93%.
For Amazon owner, Jeff Bezos Friday, 29 April 2016 was a day of dramatic celebration. His net worth spiked over $5 billion on the day, as analysts across the board gave glowing recommendations of the company’s prospects. Increased price target ratings were the order of the day with top research firms such as Stifel raising their price target by $113 from $775 to $888. Quarterly earnings were so strong at Amazon that Jeff Bezos instantly became the world’s fourth richest person, surpassing Mexico’s telecom tycoon, Carlos Slim. Amazon generated EPS of $1.07 in Q1 2016 with net income of $513 million. Revenues came in at $29.13 billion year on year and this was a dramatic increase for Amazon which lost $0.12 in EPS in April 2015.
Disclosure: None.