Amazon Stock Pulls Back After Healthcare Shake-Up

AMZN has received no fewer than three price-target hikes in the past 24 hours

Managing Editor
Jan 30, 2018 at 10:19 AM
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Amazon.com, Inc. (NASDAQ:AMZN) has shaken up the healthcare sector today. The online retailer announced earlier that it will be teaming up with Berkshire Hathaway (BRK) and JPMorgan Chase (JPM) to provide cheaper healthcare for their U.S. employees, through an independently created firm. However, ahead of earnings later this week -- and despite upbeat analyst attention -- AMZN stock is lower this morning.

Over the past 24 hours, AMZN has received no fewer than three price-target raises, with at least one coming after the new partnership was announced. Just after the announcement, Monness Crespi Hardt raised its price target on Amazon stock to $1,500 from $1,250. Earlier, AMZN scored a price-target hike from Deutsche Bank (to $1,525). Both new targets represent uncharted territory for the shares, echoing Citigroup's recent $1,600 target.

Amazon stock was last seen trading down 0.5% at $1,410.59.  Ahead of the company's fourth-quarter earnings report (set for after the market close on Thursday), AMZN touched a fresh record high of $1,431.39 during yesterday's trading. The equity has rallied roughly 70% year-over-year, and more than 20% already in 2018. As such, the online powerhouse's 14-day Relative Strength Index (RSI) was at a lofty 87 at yesterday's close, indicating the shares are overbought -- and today's pullback may have been in the short-term cards for AMZN.

In the options pits, trader sentiment is extremely bullish, with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing AMZN's 10-day call/put volume ratio of 1.31, ranking in the highest percentile of its annual range. This indicates that calls have been bought over puts at a much faster-than-usual pace over the past two weeks.


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