The Amazon stock price could be on its way to a new all-time high after Jefferies appoints AMZN a ‘Franchise Pick’ and raising the price target.
Amazon (AMZN:NASDAQ) finished the day at $3,489.24, higher by $73.99 (+2.17%).
Despite AMZN trading just below its all-time high, the retail giant’s stock has underperformed the Nasdaq by a wide margin. Yesterday’s increase helped AMZN to a 7% gain in 2021.
However, Investment bank Jefferies views this underperformance as an ideal opportunity to add more stock to your shopping cart.
The bank has the stock included Amazon stock as a ‘Franchise Pick.’ The list compiles the highest conviction trades according to in-house analysis.
Furthermore, they upgraded the Amazon stock price forecast to $4,200, roughly 20% higher than yesterday’s closing price.
Moreover, the stock should benefit from a recent upgrade credit upgrade by Fitch Ratings from A+ to AA-.
The upgrade reflects Amazon’s strengthening positions in global e-commerce and cloud computing services, close customer connections, significant scale with nearly $50 billion in 2020 EBITDA, strong FCF generation, and reasonable leverage profile with adjusted debt/EBITDAR (capitalizing rent at 8x) expected to trend near 2.0x.
The weekly chart shows that Amazon has traded broadly sideways for the last year.
The top end of the horizontal channel is evident around $3,550. This is reinforced by 2 previous record highs of $3,552.25 in October and April’s $3,554 top.
Despite the recent upgrades, buyers may wish to enter positions on a decisive break of this authoritative resistance.
A logical place for a stop would is below the 200-day moving average at $3,211 for a 1:2 risk-reward ratio.
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