Contents
One tech analyst thinks Amazon’s stock is underappreciated. Here’s why.
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Introduction
It’s been a wild ride for Amazon stock over the past year.
The e-commerce and cloud giant has seen its shares rise more than 60% since this time last year, as the company’s strong fundamentals have driven impressive growth.
However, some investors worry that Amazon’s lofty valuation leaves little room for error. At a market cap of nearly $1 trillion, the stock is trading at around five times sales, and its price-to-earnings ratio of around 80 is well above the market average.
But one analyst thinks Amazon shares are still undervalued.
Amazon’s Stock is Underappreciated
This tech analyst thinks Amazon’s stock is under appreciated. Amazon has a lot of things going for it, and the market may not be giving the company enough credit. Amazon is a leader in cloud computing, artificial intelligence, and consumer retail. The company also has a strong balance sheet with lots of cash on hand. The analyst thinks Amazon’s stock is a good long-term buy.
Amazon’s Stock is Undervalued
Amazon’s stock is currently undervalued according to one tech analyst. The analyst thinks that Amazon’s stock is currently undervalued by as much as 20%. The main reason for this is that Amazon’s earnings have been growing at a much faster rate than the overall market. Another reason for this is thatAmazon has a much higher return on equity than the overall market.
Amazon’s Stock is Oversold
When it comes to Amazon’s stock, one analyst thinks it is time to buy.
SunTrust Robinson Humphrey’s Yruma Khan initiates coverage of Amazon with a buy rating and a $2,100 price target, representing 28% upside from where the stock was trading early Wednesday.
In a note to clients, Khan argues that Amazon is one of the best-positioned companies in the long term as it benefits from structural growth drivers in e-commerce and cloud computing.
Conclusion
Looking ahead, Ives said Amazon’s continued shift toward becoming an “everything store” will be a key driver of growth.
“Amazon is firing on all cylinders and in our opinion is significantly underappreciated as the de facto leader of next-generation commerce/retail,” Ives said. “The company continues to redefine commerce as we know it … making it an indispensable go-to player for both consumers and businesses.”
