Morgan Stanley Out In Defense Of Amazon

In a Best Idea Research Update Thursday morning, Morgan Stanley addressed the recent pullback in shares of Amazon.com, Inc. AMZN.

They note that some investors question their bullish stance on Amazon, but they continue to see "low institutional ownership and the recent earnings reset as an attractive entry point given recent signals that Amazon could become more selective on investments."

Morgan Stanley feels expectations for lower profitability are already reflected in the current price, while strength in core eCommerce markets (e.g. US, 3P) is not. While investors fear slower Amazon top-line growth, they model accelerating revenue growth through 2015 as the combination of Amazon Web Services and 3P mix offsets the slowdown in Media growth.

Shares of Amazon are down 21.8 percent year to date, although they have rallied off the yearly low of $284; Amazon was trading at $312.30 in Thursday's premarket.