Analyst: 'Buy' This FAANG Stock Ahead of Earnings

D.A. Davidson expects AMZN shares to rally another 31% in the next year

Managing Editor
Jan 25, 2018 at 10:23 AM
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Tech powerhouse Amazon.com, Inc. (NASDAQ:AMZN) is continuing its long-term trend higher, after receiving a price-target hike from D.A. Davidson. Specifically, while maintaining its "buy" rating, the brokerage firm raised its price target to $1,800 from $1,500 -- the most bullish target ever set for the FAANG stock -- citing expectations of strong results from the company's cloud computing, and profitable third-party sales. In response, AMZN stock was trading up 1% at $1,369.99, at last check.

Amazon stock has been dominating the charts over the past few years, picking up more than 65% in the past 12 months alone. The tech stock has enjoyed the support of its 30-day moving average since an Oct. 27 post-earnings bull gap, and touched a record high of $1,388.16 during yesterday's trading. From current levels, it would take about a 31.4% rally to achieve the D.A. Davidson price target.

In the options pits, trader sentiment has been bullish heading into Amazon's earnings release next week. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) show AMZN's 10-day call/put ratio of 1.24, ranking in the 95th annual percentile. This indicates that calls have been bought to open over puts at a faster-than-usual clip during the past two weeks.

Wall Street is also in the bulls' corner. Out of all 36 analysts following the FAANG stock, 33 carry optimistic "buy" or "strong buy" recommendations. However, the average 12-month price target of $1,345.24 is a discount to Amazon stock's current price, suggesting more price-target hikes could be on the horizon.

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