- Morgan Stanley added Amazon to its "fresh money buys" list of favorite stocks to own on Monday.
- The addition came following Amazon's solid fiscal fourth-quarter 2019 earnings report at the end of January.
- There's evidence that boosts to Amazon's growth and profitability are "manifesting sooner than anticipated," a group of analysts led by Michael Wilson wrote in a Monday note.
- Watch Amazon trade live on Markets Insider.
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Amazon stock is on its way up, according to Morgan Stanley.
The bank added Amazon to its "fresh money buys" list on Monday, saying that the tech giant's fiscal fourth-quarter results and first-quarter 2020 guidance on January 30 were "very strong," not just "better than expected."
The list includes a number of Morgan Stanley's favorite stocks to own, such as Walt Disney, Coca-Cola, and Microsoft.
There's evidence that Amazon's investments will lead to better growth and profitability, and that they are "manifesting sooner than anticipated," a group of analysts led by Michael Wilson wrote in a Monday note, citing earlier research done by Brian Nowak, who covers Amazon for Morgan Stanley.
Nowak has an "overweight" rating on Amazon and a $2,400 price target, which implies that Amazon will surge another 15% from where it traded at Friday's close. He boosted his price target following the company's fiscal fourth-quarter earnings release on January 30, when a beat sent the stock soaring as much as 11% in after-hours trading.
A few days later, Amazon finally became the fourth US company to ever close with a market capitalization above $1 trillion. Amazon had flirted with the key market value a few times in intraday trading, but had always fallen short by market close. It joined Apple, Microsoft, and Alphabet in the elite $1 trillion club.
But Nowak expects the stock to keep climbing, fueled by investments in Amazon's one-day shipping, which are "accelerating share gains even faster than expected," he wrote in a note January 31.
Nowak also wrote that faster fulfillment-by-Amazon adoption is driving gross profits higher, and that faster growth in the company's higher margin revenue streams is "the fuel to help Amazon invest in growth."
The positive earnings results in the beginning of 2020 gave Amazon's stock some juice after 2019, when it lagged the broader market, "as the market began to punish growth without profitability." In 2019, Amazon returned 23%, while the S&P 500 gained 31% and the Nasdaq 100 gained 40%, Wilson wrote.
He continued: "With that concern now fading for Amazon specifically, we think the catch up may have just begun."
Amazon has gained about 13% year-to-date through Friday's close.
