IBD Stock Analysis
- Shares moved above a 3,436.03 cup-with-handle buy point this week
- Buy zone tops out at 3,607.83; while higher entry point exists at 3,552.35
- Composite Rating at 83, but Relative Strength Rating sits at a weak 39
Industry Group Ranking
Cup with Handle
* Not real-time data. All data shown was captured at
1:58PM EDT on
Amazon (AMZN) is the IBD Stock Of The Day, as the e-commerce leader turned in a first-quarter earnings report late Thursday that was widely applauded by analysts. Amazon stock climbed in huge volume at first Friday, but ultimately ended up slightly lower.
Shares ended the regular session down marginally to 3,467.42 on the stock market today. The stock moved above a 3,436.03 cup-with-handle buy point earlier in the week. The buy zone tops out at 3,607.83. A slightly higher alternative entry also awaits at 3,552.35, a dime above its record high set on Sept. 2, according to MarketSmith analysis. Shares went above that buy point, touching a high of 3,554, before retreating.
Amazon stock is breaking out after basing for several months. The handle also basically coincides with the February short-term high.
Amazon reported first-quarter earnings of $15.79 a share, racing past views for $9.54 a share and up 215% from the year-ago period.
Revenue jumped 44% to $108.5 billion, as the e-commerce and cloud computing giant also guided higher. It expects second-quarter revenue in the range of $110 billion to $116 billion, above estimates of $108.8 billion.
Revenue for the company’s cloud service outfit, Amazon Web Services, jumped 32% to $13.5 billion, with an operating profit of $4.16 billion.
Price Targets Raised On Amazon Stock
Multiple analysts raised their price target on Amazon stock, ranging from a high of 4,500 down to 4,125.
“First-quarter results reflected accelerated momentum across all segments,” Oppenheimer analyst Jason Helfstein said in a note to clients. He raised his price target on Amazon stock to 4,400, from 4,200.
Amazon entered 2021 with plenty of big opportunities, including plans to expand its virtual health care program across the U.S.
On March 17, Amazon announced that its telehealth pilot program called Amazon Care, which it launched at its Seattle headquarters 18 months ago, will expand to all of its U.S. employees and their families, as well as to other firms, this summer.
If Amazon can deliver more efficient health care services, the potential is enormous for fueling its growth engine — and by extension Amazon stock. Health care now comprises nearly a fifth of the U.S. economy.
The company ended the quarter with more than 200 million paid Amazon Prime members. They are Amazon’s most lucrative customers. That’s up by 50 million since the third quarter of 2020.
Preparing For CEO Transition
On Feb. 2, Amazon founder Jeff Bezos said he would hand off his role as chief executive in the third quarter of 2021. The new CEO will be Andy Jassy, the CEO of its cloud computing unit. Bezos is not leaving. He will transition to the role of Executive Chairman and remain active.
The IBD Stock Checkup tool shows that Amazon stock has an IBD Composite Rating of 83. The rating means Amazon stock currently outperforms 83% of all stocks in terms of the most important fundamental and technical stock-picking criteria.
But its Relative Strength Rating is a weak 39. The rating tracks market leadership by showing how a stock’s price movement over the last 52 weeks measures up against that of other stocks. Ideally, look for stocks with a rating of 80 or higher.
Amazon’s relative strength line has moved up in the last few weeks after trending lower since July.
Amazon Stock Above 50-Day Line
AMZN stock popped above its 50-day moving average on April 5, a positive indicator. The line helps investors quickly gauge whether a stock is showing strength or weakness. If a stock is trading below this line, then it’s typically a sign of weakness.
You’ll also find alerts to warning signs and sell signals that show when to take your profits or cut short any losses. And, you’ll discover if the current stock market trend is conducive to buying stocks, or if it’s an environment where you want to take defensive action and sell.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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