Even though it is off 57% from its 52-week high ($97.43), Amazon.com (AMZN) is still overvalued. It is trading at a lofty 28x the average analyst estimate for 2009 earnings (a PE/Growth that’s 20% higher than its comps) and an even more outlandish 15.3x enterprise value to EBITDA (double its comps). SEE COMPARABLE ANALYSIS BELOW
Sure, Amazon is by far the dominant online retailer. But, the consumer is getting crushed right now and will continue to hurt well into 2009. This will put a signifant drag on the margin-improvement story that had driven much of Amazon’s run-up during 2007 and early 2008.
Buy Januray puts now. We would recommend the Jan 30’s trading at $1.95 (ZQNMF.X)
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