Citigroup downgrades Amazon.com (AMZN ) to sell from hold and keeps its $40 target price.
Analyst Lanny Baker says Citigroup's 2004 E-Commerce Survey indicated traditional retailers growing their bases at four times the rate of "pure-play" Internet retailers. He says while healthy eCommerce activity benefits Amazon, other retailers have noticed the same trend and believes the heat of competition is rising.
Baker expects Amazon's North American sales growth, estimated at +15% to 18%, to lag overall eCommerce market's by more than 500 basis points in the fourth quarter. He believes all good news is fully priced into Amazon, and near term news flow for the company is likely to be weaker than underlying eCommerce activity.