Gene Munster Explains Why He Raised Amazon's PT To $520

Piper Jaffray’s Gene Munster released a note to investors on Wednesday in which he raised his price target on Amazon.com, Inc. AMZN from $475 to $520, following which Amazon’s shares opened strong and continue to trade higher.

Munster was on CNBC recently to explain the reasoning behind raising his price target on the company.

Margins + Revenue Growth

"Even though this whole margin's story— people are well aware of it and that’s been the driver of that 40 percent move in the stock more recently," Munster said.

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Munster continued, "The three quarters in a row does represent a trend and, I think, people will get more comfortable in the whole margin story.”

Additions To The Story

"The new piece to it, which we are adding to our existing theme, is this idea of revenue growth. Amazon invested heavily in 2014 in terms of same-day delivery and other things like lower pricing [...] and we think that ultimately is going to have a positive impact on revenue growth."

Secular Growth For Next 10 Years

On his comment in the note that "e-commerce is still in infancy," Munster said, "That particular comment was from E-Marketer, which is a third-party data that suggested 6.5 percent of what’s bought is bought online in the U.S.

"It’s overstating the obvious; but in some respect, it’s important to do that because, I think, sometimes we lose track – because we have talked about e-commerce for 10 years that this is still in infancy. And Amazon is a market-share gainer. The fact that they are going after same day, that’s going after traditional retailers that have had in-store pickups."

Munster concluded by sharing that he feels in 10 years, 30 percent of all purchases in the U.S. will be made online and "Amazon is in great position to have secular growth."