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Piper Jaffray Cuts Amazon.com to Underperform


Piper Jaffray downgraded Amazon.com (AMZN) to underperform from market perform.

Analyst Safa Rashtchy says GAAP earnings per share were double his 13 cents estimate, on one-time gains and lower stock-compensation charges. He raised the 76 cents 2004 GAAP earnings per share estimate to 93 cents to reflect lower non-cash stock compensation charges, and upped the $1.09 2005 estimate to $1.17.

Rashtchy says while the company's business is growing as e-commerce grows, the metrics don't look pretty. He notes gross margins continue to decline, revenue growth is declining, guidance sees further declines, third-party sales remain well under 5% of total revenues, and Amazon's valuation is one of the richest in the sector. He says it's hard to see any positive catalyst in the near future. Rashtchy cut the $52 target to $42.


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