AmTech’s Tim Boyd thinks Amazon is priced for perfection and doesn’t believe the company can deliver it. Specifically, he doesn’t think Amazon can repeat the performance of the past few quarters and sail over both revenue and earnings estimates on Wed:
We expect Amazon’s 1Q08 results to be In-Line….Given the material deterioration in the U.S. consumer’s balance sheet YTD, we believe that AMZN is unlikely to post the kind of revenue upside to which the market has become accustomed over the last year. In addition, the fact that the Street is modelling operating income at the high end of management’s guidance range leaves little chance of an upside surprise on the bottom-line.
We will also be paying close attention to how back-end loaded AMZN’s full-year guidance is based on 2Q08 guidance. AMZN shares remain priced for clean Beat and Raise quarters. In our view, there is no other way to explain the valuation disconnect between AMZN and the rest of the tech sector.
Friday’s rally has created an attractive opportunity to short the stock into the print. In our view, Friday’s rally had nothing to do with AMZN and everything to do with the high-beta updraft created by GOOG. With that in mind, we recommend a short position into the report on Wednesday, April 23rd. Reiterate SELL.
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