(Updated from 10:38 a.m. ET to include latest share prices, more analyst commentary.)
NEW YORK (TheStreet) -- Shares of Amazon.com (AMZN) fell Monday after Bank of America Merrill Lynch downgraded the stock to neutral, saying a "protracted" investment cycle may weigh heavier on the online mega-retailer's bottom line than expected.
The firm also expects competition from Google (GOOG), Apple (AAPL) and others in digital media to keep Amazon's valuation multiple in check, and said it thinks the consensus estimates for the second quarter and fiscal 2013 may be too high.
"This is not an 'Amazon trades at an unjustifiable P/E call' (CSOI [consolidated segment operating income] margins should rebound to 6-7% from ~2% today in our view, but maybe later than most think), but with the stock up 18% YTD and for the reasons cited above, we are downgrading to Neutral," said B of A, which has a $235 price target on the stock.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV