To: jbn3 who wrote (252 ) 3/29/1999 6:29:00 PM From: Chuzzlewit Read Replies (1) | Respond to
Bachman, you laugh, but it almost appears this way. I didn't have any basis for inclusion of AMZN's auction site in my analysis -- I have no idea at this point what they will do to the numbers, but here is a really odd methodology that Everen uses to value AMZN. They forecast earnings of $1.77 per share for 2003 and assume a forward P/E of 80 (on what basis I don't know), yielding a price in 2002 of $141.60. They then discount this price back to the present using an opportunity cost of 5.15% plus a risk factor of 0.5%!!!! so you calculate this stuff out and voila! a valuation of $120/share 6 months hence. But that would mean that if the target price were achieved the rate of return to the investor starting 6 months from now through the end of 2002 would be 5.65%. Who in his right mind would invest in a stock like AMZN with a potential return limited to 5.65%? These guys also have a buy rating. Oh, and they have an 18 month price target of $127!
