Market Commentary

Amazon Gains as Morgan Stanley Sees More Upside

Rahul Joshua
6 Feb 2024 · 1 minute read

Amazon (AMZN:US) shares have continued to move higher on Thursday, just a day after the tech titan hit its fresh 52-week high above the $140 mark. 

The stock received another boost this week after Morgan Stanley (MS:US) analysts said they see further potential for this upward trend to continue.

Analyst Brian Nowak flagged three key factors that could contribute to an improvement in North American retail profitability for Amazon:

  1. Lower shipping and fulfillment costs per unit.

  2. Content cost Discipline (Prime).

  3. First-party (1P) merchandise margins.

“AMZN currently trades at a ~0.6X PEG on our '25 “efficiency upside” case, a ~15% discount to its median tech peer group. As shown, valuing AMZN at a .7X PEG (in line with mega cap tech) would imply a ~$160 share price if this efficiency upside and higher earnings comes into view. But this PEG would still be a ~70% discount to WMT (and material discount to other retailer and staples peers),” analyst Brian Nowak said in a client note.

Morgan Stanley’s bullish comments come despite a 68.8% year-to-date rally in the stock.

Congress members disclosed several bigger trades in the stock recently. Representatives Michael Burgess and Michael McCaul were both selling AMZN stock in May and August, taking care of the robust run-up in shares YTD.

On the other hand, Congressman Ro Khanna has been actively buying Amazon shares throughout 2023.