Amazon Priced at a Premium to Peers

Although the valuation of Amazon.com (AMZN) has fallen significantly with the other mega-cap technology stocks, it still commands a hefty premium to its peers. Priced at 34 times profits expected over the next 12 months, Amazon has the most expensive valuation among mega-cap technology stocks.  Moreover, the valuation for Amazon remains high despite the outlook for slowing growth, with analysts projecting revenue growth of 8% this year for the company, compared with an average of 24% over the past five years.

Some analysts are wary of Amazon’s high valuation.  For example, Ingalls & Snyder said it has been selling down its position of Amazon for more than a year due to a slowdown in Amazon Web Services, which has been a main contributor to the company’s sales and profits.  Also, CI Roosevelt said, “when we compare Amazon to other large technology companies, there is better value and a better risk-reward proposition than those other companies.”