In a recent analyst note issued by Morningstar the research firm argues that now might be an opportune time to buy the stock as it trades 20% lower than it’s price target of $400.
In the note, the analyst stated:
After pushing a recent high of almost $380 in late March, Amazon shares have pared back to just over $320 over the past few weeks and now trade at almost a 20% discount to our $400 fair value estimate. We attribute the weakness more to an increasingly risk-sensitive market and less to company-specific factors, as Amazon has recently announced several new devices that enhance its network effect and give consumers less incentive to go outside the Amazon ecosystem for purchases. These include the launch of the Fire TV and Amazon Dash, an at-home device with bar code scanning and voice search features that should augment a broader Amazon Fresh launch in 2014. We also believe the decision to raise the annual Amazon Prime membership fee is a signal that management plans to start layering in margin expansion in the years to come after building out its active user and Prime member bases the past several years (Amazon’s active user base now exceeds 240 million members, with roughly one 10th also being Prime members).
Amazon.com (NASDAQ:AMZN) is trading up 1.02% in pre-market trading. The company has a 52 week high of $402 and a market cap of 146 billion.
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