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Piper Jaffray Cuts to Underperform

Piper Jaffray downgraded (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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