It eventually hits all high flyers; p/e compressions that is. Today, we began to get some signs that the tide does eventually turn for high flyers with high p/e's.

Today's example is Wall Street darling, Genetech (DNA, $89.22-$4.12). While today's mild sell-off was not much of a decline,a bigger decline could be in the works. It usually is with most mo-mo stocks. When analysts begin to jump on the overvaluation bandwagon, it will be bombs away on the stock.

Here's an example:

Today, Eric Ende, an analyst at Merrill Lynch cut his rating to neutral on DNA saying " Genentech's stock is trading at a multiple of 52 times expected 2006 earnings. That compares to a multiple of 21 for rival Amgen Inc. (AMGN) and 24 for Biogen Inc. (BIIB)".

Since DNA is trading at a p/e of 75, in order for the stocks p/e to get in line with its rivals, the stock would need to be cut in half (actually more than half).

If anaylsts are going to all of a sudden get concerned about the p/e ratios of the mo-mo stocks, what are they going to do to Google (GOOG)? Even at a forward looking p/e of 50 on Google, the stock is still way more expensive than its peers.