Amazon Could Be Undervalued by Up to 70%

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At $3,419, Amazon (AMZN) may be undervalued by up to 70%.

That’s according to Jefferies analyst Brent Thill, who says the stock could carry a market cap of up to $3 trillion, as noted by Yahoo Finance.

“Our sum-of-the-parts analysis shows ~70% upside over the next three years [for Amazon], driven by Amazon Web Services and Advertising. This implies Amazon’s market cap approaches $3.0 trillion by 2024 and this does not include potentially meaningful contributions from multi-billion dollar opportunities in health care, home security, smart-home devices, and entertainment. The company also has room for further expansion in areas such as apparel, B2B [business-to-business], and SaaS [software-as-a-service],” Thill added.

Even more impressive are earnings.

In its fourth quarter, the company reported that:

  • Net sales increased 44% to $125.6 billion in the fourth quarter, compared with $87.4 billion in fourth quarter 2019. Excluding the $1.7 billion favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 42% compared with fourth quarter 2019.
  • Operating income increased to $6.9 billion in the fourth quarter, compared with operating income of $3.9 billion in fourth quarter 2019.
  • Net income increased to $7.2 billion in the fourth quarter, or $14.09 per diluted share, compared with net income of $3.3 billion, or $6.47 per diluted share, in fourth quarter 2019.

While there are plenty of bullish AMZN analysts, be cautious.

At the moment, AMZN is technically stretched at resistance dating back to August 2020. RSI, MACD, and Williams’ %R are all stretched, as well. Traders may want to wait to see if AMZN will break out here or fail, as it has at this point several times.