Benchmark Puts Buy and PT of $212 on Amazon

Benchmark put a Buy rating and price target of $212 on Amazon AMZN. In a research report published today, Benchmark states, "Amazon's stock trades at 67x our 2011E EPS and 27x our 2011E OIBDA compared with our ecommerce peer group averages at 33x 2011E EPS and 15x 2011E OIBDA. Using a PEG ratio of 1.8x, or 73x our 2011E EPS of $2.90, our price target is $212 per share. Investment spending may hinder EPS potential near-term as it pressures margins; but powerful top-line growth and the eventual conversion to EPS should drive stock appreciation. We rate Amazon a Buy." Benchmark also issued a warning, since its 2011 and 2012 earnings per share estimates on Amazon are very optimistic. In the report, Benchmark states, "Amazon (AMZN-Buy, PT $212) could sustain 40% y/y revenue growth as ecommerce demand is still accelerating, with April US non-travel Internet spending up 15%, according to comScore. Despite heavy potential investment spending, we project Amazon may show 33% y/y OIBDA growth in 2011, leading to EPS of $2.90. In 2012 EPS may reach $4.40. We recognize that our estimates exceed consensus of 2011E EPS $2.47 and 2012E EPS $3.80 and could be vulnerable if Amazon's investment spending cycle gets extended." On Tuesday, Amazon added 1.19% to its value to close the day at $194.81. Its shares continued to move towards Benchmark's price target in today's pre-market trading. At the moment, Amazon is trading at $195.20, or 0.2% higher than its Tuesday's closing value.