Amazon (AMZN) Believed to Have 60M Prime Users and Growing - Piper Jaffray

Growth rates for Amazon's (NASDAQ: AMZN) Prime service continue to remain surprisingly strong despite the already large user base, Piper Jaffray analyst Gene Munster said in a new report Thursday.

Munster now estimates that Amazon has 60 million Prime users. Based in part on their Google search term index, they believe Amazon added 8-9 million Prime subscriptions during the full holiday season, ahead of the firm's previous expectation of 6-7 million, and slightly less than 10 million added in December 2014.

The analyst said Prime alone should drive approximately $800 million of incremental FCF during the December quarter. This is 13% of total FCF.

Over the long-term, a strong Prime base should drive unit growth >20% over the next couple of years, above investor expectations of high teens unit growth, Munster said.

The analyst also notes Prime drives profitability via the Prime subscription revenue stream (~$6B a year) and lower retargeting costs.

The firm maintained an Overweight rating and price target of $800 on AMZN.

For an analyst ratings summary and ratings history on Amazon.com click here. For more ratings news on Amazon.com click here.

Shares of Amazon.com closed at $571.77 yesterday.

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