UBS AG (NYSE:UBS) has upgraded Amazon.com, Inc. (NASDAQ:AMZN) to a Buy from Neutral in a report the bank released today. The company says that Amazon is well positioned in several different markets that are likely to grow, and the company could deliver a 20% compound annual growth rate over the medium term.

Amazon

On the back of the report, shares in Amazon.com, Inc. (NASDAQ:AMZN) traded up on this morning’s market. The company’s stock opened this morning at $319.36, a gain of more than 2% overnight. the UBS AG (NYSE:UBS) report puts a price target of $385 on the online retailer. The company had recently initiated coverage of Amazon with a price target of $305.

Near term troubles at Amazon.com, Inc. (NASDAQ:AMZN)

Eric J. Sheridan, the lead analyst on this report, is not certain of Amazon.com, Inc. (NASDAQ:AMZN) prospects over the short term. According to his research the near term at Amazon could be choppy. All of the company’s focus is on next year, however, and that’s where Sheridan is sourcing his thoughts on the company from.

Sheridan likes businesses based on platforms, and Amazon.com, Inc. (NASDAQ:AMZN) fits the bill. The company has a successful tablet and e-reader business and it may add an Amazon smart phone to the line up next year. The near term may be volatile for commerce at the firm, but Sheridan believes business will pick up next year as the company’s platform gets stronger.

Getting over the near term is what Amazon.com, Inc. (NASDAQ:AMZN) is all about. The company has disappointed on three of its last five earnings reports, and the stock keeps growing based on revenue expansion, and promises of future earnings. There may be a problem with that model, however.

Amazon.com, Inc. (NASDAQ:AMZN) bubble

Amazon.com, Inc. (NASDAQ:AMZN) is an incredible company, there’s little doubt about that. The firm has managed to wedge itself into a large amount of growing industries and it’s managed to take a big part of some of them. The company’s media and Amazon Web Services businesses are good examples of its growth into new areas.

The problem for investors is, however, the company’s share price. Amazon.com, Inc. (NASDAQ:AMZN) shares are trading at close to 400 times projected 2013 earnings and more than one hundred times projected 2014 earnings. The retailer has a gigantic amount of growth already priced into its stock. There are risks at every company, and Amazon could lose a great deal of value if it fails to meet targets.