'Great' Not Enough for Amazon

Updated from 6:13 a.m. EDT with new stock price

Amazon.com(AMZN Quote) has had a huge run, but it may be time for investors to wonder how much is left.

And given the enormous short interest in the stock -- 15.2% of the float was short as of June 12, according to Yahoo! Finance -- the Web retail giant's second-quarter earnings results on Tuesday afternoon will be especially important.

For the quarter, analysts surveyed by Thomson Financial/First Call forecast earnings per share of 16 cents on revenue of $2.81 billion.

Amazon shares have gained 60% over the past three months, recently trading at $70.67. Investors piled into the stock following a blowout first quarter three months ago in which the company reported continued strong top-line growth as well as unexpectedly strong operating margins.

The company also said that it expects spending on technology and content, which eats into margins, to be slower this year when compared to 2006.

Subsequently, Wall Street analysts scrambled to keep their 12-month price target for the stock close to its actual, rapidly rising value over the quarter. But the company now commands a steep valuation of 54 times forward earnings. And even analysts who are bullish about the business are hesitant to back the stock at its current valuations.

"Great company, fully-valued," Stifel Nicolaus analyst Scott Devitt wrote in a research note maintaining his hold rating on Tuesday. "We would revisit our rating on Amazon shares if the business materially outperformed our expectations or if the shares returned to the low-to-mid $50s, all else being equal," Devitt wrote. Stifel Nicolaus is forecasting earnings per share of 15 cents on revenue of $2.76 billion -- slightly under the Street consensus. Stifel Nicolaus makes a market in Amazon shares.