Gene Munster Thinks Amazon Will Continue To Grow

Gene Munster thinks Amazon.com Inc. AMZN is primed for even more growth. 

Appearing Wednesday morning on Benzinga's PreMarket Prep, the Piper Jaffrey analyst estimated that between 9-10 million users joined Amazon's Prime service last year, and that they're approaching 60 million on the platform.

"We think the growth in prime is going to be a catalyst," he said. "They're getting to the point where everyone's getting Prime."

Munster, who has an $800 price target on Amazon, noted that the typical Amazon Prime user spends 3-4 times more than the non-prime user. And as the service expands to new categories, the customer base will continue to come back. 

Changing The Perception

Munster's bullishness on Amazon comes from Prime's expansion into two areas: groceries and same-hour delivery. And though it will probably take several years for the perception of the company to change, he called this development "an important part of the story." 

"One of the reasons why traditional retailers exist is the instant gratification of walking into the store and picking something up right now. But Amazon's going to slowly take that away."

In the last three months they've doubled the amount of cities where same-hour delivery is available up to 26 cities, compared with last year where it was only offered in Manhattan. 

Competing With Carriers?

Though rumors have persisted that Amazon could expand their delivery operation to lesson reliance on traditional carriers like FedEx Corporation FDX and United Parcel Service, Inc. UPS, Munster thinks they'll continue to rely on them. 

"It's true they're experimenting, but the real substance of what FedEx and UPS does for Amazon is that last mile," he said. "The math just doesn't add up for Amazon to build this out themselves." 

According to Munster Amazon accounts for about 20% of volume on those carriers. 

Amazon fell off a morning high of $602 down to $584 before rebounding slightly in morning trading. 

Listen to the full interview with Gene after the first break in the clip below, and tune in to PreMarket Prep every morning from 8-9:30 a.m. EST for more exclusive interviews and analysis of the morning market.