Market Overview

5 Reasons Why Amazon Is Morgan Stanley's Top Pick

Share:
5 Reasons Why Amazon Is Morgan Stanley's Top Pick

E-commerce giant Amazon.com, Inc. (NASDAQ: AMZN) has won Morgan Stanley's seal of approval in the face of a coronavirus pandemic threatening the economy. 

The Amazon Analyst

Analyst Brian Nowak maintained an Overweight rating on Amazon with a $2,400 price target.

The Amazon Thesis

Amazon's share gains, improving one-day efficiency, rising mix of high-margin revenues and expectations of over 20% consensus earnings beats have made Morgan Stanley bullish on the company, Nowak said in a Sunday note. (See his track record here.)

Secondly, evidence suggests online grocery demand is surging, the analyst said. Morgan Stanley expects the ease and convenience of shopping online for groceries and consumables to lead to more long-term online grocery purchasing, he said. 

Amazon's access to a growing database of the consumables that each household orders will help it to better curate and target people going forward and sustainably penetrate the $800-billion addressable U.S. grocery market, Nowak said. 

Thirdly, the near 25% drop in the price of oil will likely drive a $2 billion to $3 billion operating profit tailwind, as about $50 billion in estimated 2020 shipping costs for the company are related to fuel, the analyst said.

Amazon is a near-term, dark horse stay-at-home play, he said. 

The company's AWS powers many leading consumer applications such as Walt Disney Co's (NYSE: DIS) Disney+, Netflix Inc (NASDAQ: NFLX), Apple Inc. (NASDAQ: AAPL), Snap Inc (NYSE: SNAP) and other leading social video players, Nowak said.

These companies are likely to see ramping consumer use and compute/storage/AWS needs, which in turn is likely to benefit Amazon, the analyst said. 

This will lead to faster AWS adoption over the long term, he said. 

"The extent to which we are entering an economic downturn is likely to lead to faster long-term public cloud adoption as companies evaluate costs more closely and look for more efficient long-term business structures."

The stock was down 2.46% at $1,741.15 at the time of publication Monday. 

Related Links:

Why This Analyst Recommends Buying Amazon, Baidu, Facebook And Uber Following COVID-19 Battering

Here's How Long It Took Amazon To Reach A $100B Market Cap

Photo courtesy of Amazon. 

Latest Ratings for AMZN

DateFirmActionFromTo
Jun 2020MizuhoMaintainsBuy
Jun 2020Deutsche BankMaintainsBuy
Jun 2020SunTrust Robinson HumphreyMaintainsBuy

View More Analyst Ratings for AMZN
View the Latest Analyst Ratings

 

Related Articles (AMZN)

View Comments and Join the Discussion!

Posted-In: AWS Brian Nowak e-commerce Morgan StanleyAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
BKHMizuhoMaintains70.0
JOBAlliance Global PartnersUpgrades2.5
RARECanaccord GenuityMaintains91.0
TTDOppenheimerMaintains450.0
PYPLWedbushMaintains200.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com