Morgan Stanley Boosts Amazon (AMZN) PT to $950 as Prime Members Grow and Grow and Grow
- Wall Street ends first day of third quarter with solid rebound
- Tesla (TSLA) Delivered 254,695 EV Units in Q2, Below Consensus
- Goldman Sachs Warns Clients of More Equity Market Losses in Second Half of 2022
- Kohl's (KSS) Falls 15% After Ending Sale Talks With Franchise Group and Issuing Q2 Warning
- General Motors Warns It Has 95k Vehicles in Inventory Without Certain Components
News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.
Morgan Stanley analyst Brian Nowak boosted his price target on Overweight-rated Amazon.com (NASDAQ: AMZN) to $950.00 (from $800.00) after the firm's AlphaWise shows continued strong Prime sub growth, now at an estimated 60 million members.
The firm's AlphaWise data show that AMZN’s Prime subscribers continue ramping... rising by 28% (or 13mn) over the 7 months ended May 2016. The US has been particularly strong, with an estimated 41 million Preim members and in all, they estimate that there are 60 million global Prime members.
The free two-day shipping continues to be the most common reason people sign up for Prime, but a rising percentage of people in the UK/Germany/Japan list Prime Instant Video as a leading reason too.
Given the strong trends, the firm raised their '17/'18 Prime estimates by 12%/14%, and are now expecting Prime to reach 100 milion in 2018, versus 88 million previously.
Nowak notes their data shows that Prime members are spending ~4.5X more on AMZN than non-Prime US AMZN shoppers (~$2,500 vs. ~$550 annually). In addition, ~40% of US Prime subs spend >$1,000 per year (vs. only 8% of non-Prime members).
"We think part of this higher Prime spend is driven by how long people are Prime members, as over time, AMZN's Prime behavior modification causes people to shop more frequently and in more categories," Nowak said. "Indeed, our industry conversations indicate that some more mature Prime members (7-10 year members) spend as much 10X+ more than non-Prime members."
They view this as bullish for Amazon's forward growth, given their data show that 25-40% of Prime subs across US/UK/Germany/France/Japan joined within the 6 months leading up to May 2016. This likely sets up well for AMZN's 2016 holiday season too, as it means that ~13mn+ Prime members (and likely more with new additions post May 2016) will go through their first full holiday season as Prime members in 2016.
Shares of Amazon.com closed at $834.03 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Deutsche Post AG (DPW:GR) (DPSGY) PT Lowered to EUR50 at BofA Securities
- Telenor ASA (TEL:NO) (TELNY) PT Lowered to NOK135 at UBS
- Telia Co AB (TELIA:SS) (TLSNF) PT Raised to SEK46 at UBS
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst PT Change
Related EntitiesMorgan Stanley
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!