BGC Partners Maintains Sell on Amazon.com Ahead of December Quarter Earnings Report

BGC Partners has published a research report on Amazon.com

commenting on the company's earnings preview noting that the upper end of guidance was not exceeded during the September quarter. In the report, BGC writes, "The company is facing more difficult growth comparisons in 2012 given the positive trends for e-commerce in 2011. Given its high price-earnings multiple, which at 183x our 2011 estimate is over five times that of any other company in our coverage (which has a median multiple of 15x 2011 earnings), if investors stop awarding Amazon a premium, the company could face lengthy downward or sideways share price action. Amazon is neither the fastest growing, or most profitable, company in our coverage. We estimate Amazon is selling the Kindle currently for no profit, and do not see the company changing this in the near future. We also point out that the declining margins the company experienced in 2010 and 2011(from 5.5% in March quarter, to 4.1% in June quarter, 3.5% in September quarter, and 3.7% in December quarter of 2010, 3.3% in the March quarter, 2.0% in the June quarter and 0.7% in September quarter of 2011) could be a derivative impact from increasing adoption of its eReader. We estimate 4.5 million kindle fire tablets sold." BGC Partners maintains its Sell rating on Amazon.com, which is currently trading down $1.20 from yesterday's $192.15 closing price.