Amazon's Price Tag Gives Pause

Wall Street can't get enough of Amazon.comAMZN, but investors might want to take a break on the sidelines.

On Thursday, RBC Capital Market became the latest firm to put a staggering price target increase on the stock while maintaining a neutral rating.

RBC analyst Jordan Rohan upped his price target by 67%, to $75 from $45. Shares of Amazon were recently up $1.12, or 1.7% to $69.26.

Rohan joins the line of sell-side analysts to suddenly see more potential in Amazon after a sharp rally in the stock following a strong first quarter.

Wall Street has scrambled to raise price targets fast enough to keep up with the soaring stock. Shares of the online retailer have rallied about 20% since the last week of April, and major investment banks such as Citigroup and Goldman Sachs have increased sharp price targets during this time.

Investors, however, should be wary of the sudden, newfound bullishness, because momentum-chasing -- rather than a dramatic change in Amazon's fundamentals -- may be driving the stock.

But that momentum could turn quickly given the stock's lofty 53 times forward earnings -- and the staggering 2.73 price-to-earnings-to-growth ratio it commands.

Indeed, RBC may be reaching when calculating the aggressive price target for the stock. "We are releasing our initial 2009 estimates and rolling our price target to incorporate 2008 and 2009 estimates versus the prior practice of using 2008 only," said Rohan.