Amazon downgraded at Piper Jaffray By Tomi Kilgore Last Update: 10:18 AM ET Apr 23, 2007 NEW YORK (MarketWatch) -- Amazon (AMZN : Amazon.com, Inc News , chart , profile , more Last: 44.38-0.57-1.27% 12:45pm 04/23/2007 AMZN44.38, -0.57, -1.3% ) was downgraded to underperform from market perform at Piper Jaffray, which believes the stock is overvalued, given Wall Street's expectation of margin improvement. The stock was trading down 1.2% at $44.41, but was still well above Analyst Aaron Kessler's price target of $36. Kessler believes the current valuation reflects an anticipation of "significant" margin expansion over the next couple years, but he said that was "unlikely" given Amazon's current growth initiatives and continued high levels of investments. "While there is clear opportunity for Amazon to increase margins longer term as it slows technology and content spending, we do not expect to see much leverage in 2007," Kessler said in a research note. ---------------------------------------------------------------------- Amazon Jumps On Upgrade Matthew Kirdahy, 04.16.07, 5:30 PM ET Recent spending on technology seems to have been a good investment for one of the original dot.coms. Amazon.com saw its stock jump 6.6% on Monday, gaining in part from a positive review of its capital expenditures meant to lure other companies into using its computers. Amazon.com (nasdaq: AMZN - news - people ) gained $2.79, to $45.20, in heavy trading. During the session it touched $45.27, a 52-week high. Analyst Jeetil Patel at Deutsche Bank upgraded the stock to "buy" from "hold," saying the company's heavy spending on technology in the past few years is about to pay off. In a note to investors, Patel wrote, "We believe the potential for operation margin improvement exists in the near term, while the company's Web services initiatives could provide added growth and margin expansion longer term." Amazon, said Patel, seems to be "trying to create the operating system of the Internet -- the backbone of infrastructure consisting of hardware, storage systems and algorithms that collectively create a grid computing model that can be used by others on a per-usage basis." These Web services, which have monthly fees of as little as $3 a month -- before usage charges are added -- allow Amazon to sell its computing assets to other companies at a price low enough to make them attractive. Because much of the investment in extra capacity has already been made, Patel said, revenue contributions from Web services should largely go to the company's bottom line. Patel also raised his price target to $50 from $37. The Seattle-based Amazon, with $10.7 billion in 2006 sales and net income of $190 million, has hiked technology investments by $150 million to $200 million a year for the past three years, said Patel. This year, the analyst expects spending of a little more than $600 million, representing an increase of about $80 million.