On Monday morning, Morgan Stanley analyst Scott Devitt upped his rating on Amazon (NASDAQ:AMZN) to Overweight and set a price target of $325 for the stock. Devitt based his assessment of the Internet retailer on his predictions for the company’s future earnings. In his note seen by Forbes, he wrote that Morgan Stanley expects that global e-commerce sales will grow to $1 trillion by 2016, a figure that nearly doubles the $512 billion the firm estimated for the e-commerce market in 2012.
Along with the rising e-commerce sales, Amazon’s market share is projected to increase from 14 percent in 2012 to 23.5 percent in 2016. Previously, Morgan Stanley had expected the company to have a 20.6 percent share.
In support of his assessment, Devitt argued that Amazon’s fulfillment network is “an underappreciated, strategic asset.” As he believes that the profitability of offline and online retail will depend “upon last-mile fulfillment capabilities,” companies that can decrease the variable costs in exchange for fixed-costs “will have the opportunity to expand margins and take share.” Amazon is one of these companies.
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