Morgan Stanley: Amazon's fresh food business has considerable growth potential, reiterates "Overweight" rating
Morgan Stanley reiterated its "Overweight" rating on Amazon, with a target price of $300, emphasizing its expansion potential in the fresh grocery market. Analysts pointed out that Amazon's entry into the $600 billion fresh food market will drive its continued growth, with an expected increase of 120 basis points in total transaction volume for every 1% market share gained. Cantor Fitzgerald and Barclays also reaffirmed their "Overweight" rating on Amazon, focusing on its innovations in Wi-Fi services and artificial intelligence
According to Zhitong Finance APP, Morgan Stanley reiterated its "Overweight" rating on Amazon (AMZN.US) and set its target price at $300. The firm emphasized Amazon's expansion in the fresh grocery market. It believes that Amazon's entry into the $600 billion fresh food grocery sector will serve as a catalyst for its continued faster growth, building on its strong performance over the past 12 months with a revenue growth of 10.9% to $670 billion. Morgan Stanley pointed out that for every 1% market share Amazon gains in this area, it could increase its total merchandise transaction volume in the U.S. by approximately 120 basis points.
Morgan Stanley noted that Amazon has built the logistics network necessary to support this fresh food business expansion. The company also emphasized that higher profit margins on fresh goods and a minimum $25 shopping basket requirement put the fresh food business in a favorable position.
Analysis indicates that Amazon's fresh grocery business is expected to become profitable, contributing to growth in the company's EBIT. Morgan Stanley maintains its "Overweight" rating on Amazon, reflecting its optimistic outlook on the e-commerce giant's growth prospects as Amazon leverages its existing infrastructure to capture market share in the large fresh grocery market.
Cantor Fitzgerald also reiterated its "Overweight" rating on Amazon stock, believing that the company's partnership with JetBlue Airways (JBLU.US) to provide in-flight Wi-Fi services via the Kuiper satellite network starting in 2027 has positive prospects. Similarly, Barclays Bank also reaffirmed its "Overweight" rating on Amazon, focusing on the growth of Amazon Web Services (AWS) artificial intelligence workloads; Barclays noted that Anthropic is currently contributing to AWS growth and could significantly increase its impact in the future. These developments highlight Amazon's ongoing efforts to innovate and expand its business across various sectors
