Deutsche Bank Reiterates Buy on Amazon (AMZN); $110 PT

July 15, 2008 10:52 AM EDT

Deutsche Bank reiterates its Buy rating and $110 price target on Amazon.com (Nasdaq: AMZN).

The firm believes shares of Amazon could "react positively to the announcement of a third-party payment service", which would allow online merchants to Amazon's payment processing features. Deutsche feels that such a service could be "quite competitive with eBay's (Nasdaq: EBAY) PayPal" over time, given that Amazon has about 80 million paying customers and about 100,000 merchants. Based on these numbers, the firm estimates that Amazon could "undercut PayPal pricing on debit/e-check pricing.

With shares of Amazon trading around $64 today, Deutsche's $110 price target represents a potential gain of more than 70% from current levels. The firm said its price target is based on 27x FY08 estimate EPS, which is a slight premium over the sector average of 25x, but Deutsche notes that a "premium is justified
given continued fundamental growth, improved operating leverage and the long term potential of its technology investments."

Amazon.com, Inc. operates retail Web sites, as well as provides programs that enable third parties to sell their products on its Web sites in North America and internationally.

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