Amazon's Beats 'Only Getting Started,' Morgan Stanley Says

In a report published Thursday, Morgan Stanley analysts maintained an Overweight rating on

, while raising the price target from $450 to $520. The analysts expressed optimism regarding the company continuing to deliver earnings beats. Amazon reported retail gross profit / customer growth of 15 percent for 1Q15, marking the fastest growth since 4Q09. "Amazon Prime and efforts to improve selection, pricing and conversion are accelerating wallet share gains, and AMZN is expanding margins too," the analysts said. They expect the company to beat the current Street estimate and achieve 7 percent GP/customer growth in 2016. In the report Morgan Stanley noted, "AMZN's segment disclosure taught us int'l retail losses are less severe than believed as int'l retail only lost -$144mn in '14 (vs. the total reported -$298mn) and 1Q:15 was break-even ex-FX…AMZN's '16 int'l losses would have to reach a record -$372mn in order to get down to Street CSOI numbers." While AWS is generating more profits than was previously expected and has easy comps, the Street estimates imply margin contraction that is 190bps higher than what the analysts have modeled. The gross profit estimates for 2015 and 2016 have been raised by 1 percent and 2 percent, while the CSOI estimates have been raised by 13 percent to $366mn and by 9 percent to $397mn, respectively.