Around the Net

How Long Can Amazon Party Last?

  • Reuters, Thursday, July 26, 2007 12:15 PM has posted consecutive quarters of dazzling results, resulting in a change of tune on Wall Street about the online retailer's long-term prospects--but not necessarily for the better. However, despite the long-term caution, the company's stock rose 24% yesterday following Tuesday's second-quarter earnings report. In the last year, the stock has seen a three-fold increase.

Second-quarter results: earnings tripled, revenue was strong and profit margins actually expanded. For years, Wall Street complained that Amazon was myopically focused on sales at the expense of profit, as Amazon turned its attention to technology and content.

Now that Amazon has gone "two for two" in 2007, as Jackson Securities analyst Brian Bolan wrote in a research note on Wednesday, Wall Street is wondering how long the party can last. Some analysts raised their earnings estimates and price targets for the stock, while others said Amazon had exhausted its mileage from recent growth, which now has the company's valuation pegged to 50 times estimated 2008 earnings--well above rival eBay, whose core business continues to struggle for growth. Its stock trades at 21 times estimated '08 earnings.

Read the whole story at Reuters »

Next story loading loading..