Amazon.com (AMZN): Grocery and Clothing to Drive 26% US Growth - Morgan Stanley

Morgan Stanley analyst, Brian Nowak reiterated his Overweight rating on Amazon.com (NASDAQ: AMZN) after AlphaWise data showed continued eCommerce/AMZN traction in the ~$1 trillion grocery/clothing categories. The analyst believes grocery/clothing can drive 26% growth in the US market.

Only 12%/18% of US consumers buy fresh/packaged groceries online – but penetration continues to rise (up 400bp/200bp sequentially in the Morgan Stanley survey). Share of wallet is headed up too, as 17% percent of online grocery shoppers expect to increase their online spend over the next 12 months (up from 13% in 4Q:15). This growing population of online grocery shoppers and expanding wallet is bullish for online grocery...and for WMT and AMZN, the online grocery leaders with 40% and 38% of people who buy groceries online using their sites, respectively.

Online clothing penetration is the highest of any category (52% of US shoppers have purchased clothes online in last 12 months). But here again, share of wallet appears heading upward, with 29% of online clothing shoppers expecting to increase their spend over the next 12 months (up from 25% in 1Q:15). AMZN is driving and benefiting from this shift as 45% of US consumers bought clothes on AMZN in the past 12 months, up from 39% in 1Q:15. This is the largest y/y increase of the 10 retailers the analyst monitors.

No change to $800 PT.

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 $745.81 yesterday.

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