Morgan Stanley Hikes Amazon' s Price Target From $520 to $740 Following It's 'Everything Quarter'

In a report published Friday, Morgan Stanley analyst Brian Nowak maintained an Overweight rating on shares of

with a price target hiked all the way to $740 from a previous $520. According to Nowak, Amazon reported an "everything quarter" where it showed improving profitability across all core businesses for the second straight quarter and only third time in nine years. The analyst added that the company's business is now "inflecting" around the globe with year over year constant currency revenue growth in all four of its main retail segments (North America Media, North America Electronic And General Merchandise, International Media and International Electronic And General Merchandise). Nowak continued that Amazon's quarter showed the highest gross profit per customer growth on record. The company's overall revenue growth, combined with 225 basis points of year over year merchandise gross margin expansion resulted in a 19 percent year over year growth in retail gross profit per customer – a 338 basis point acceleration from the previous quarter and the fastest quarterly growth dating back to the first quarter of 2008. Commenting on Amazon's AWS (Amazon Web Services) division, Nowak pointed out revenue of $1.824 billion was 16 percent higher than his expectations as the top-line registered an acceleration of 82 percent from 49 percent last quarter. As such, the analyst stated that the division is "accelerating" and finding "efficiencies" Looking forward, Nowak noted that Amazon's "growing pool" of gross profit dollars gives it greater flexibility to invest in new countries (such as Mexico, India and China), new categories, new SKUs and pricing while still being able to deliver "strong" operating profit. Finally, Nowak pointed out that the top end of Amazon's third quarter guidance implies it will post the highest third quarter margins since 2010.