Source: Business Insider
Amazon’s investment in one-day shipping is likely going to result in higher long-term profits, despite the initial costs to build it out, Morgan Stanley wrote in a note Thursday. In the note, Morgan Stanley raised Amazon’s operating profit estimates for 2021 and its price target to $2,200 per share. The note is the latest in a string of bullish analyst notes about Amazon’s one-day shipping initiative. Click here to read more BI Prime stories. Amazon is spending billions of dollars in making one-day shipping the default for its Prime members. Morgan Stanley is convinced the investment will pay off in a big way. In a note published Thursday, Morgan Stanley analysts wrote that while investors will be disappointed by the near-term hit on profits, Amazon’s investment in faster shipping is expected to deliver “materially higher than expected profitability in 2021 and beyond,” as it leads to more frequent and a wider group of shoppers on its site. The note said that it is raising Amazon’s operating profit estimate by 8%, or $2 billion, for 2021, and its price target by $100 to $2,200 per share — adding that “this build phase too shall pass” for Amazon. “We see one-day shipping deepening Amazon’s moats, leading to larger share gains/profits,” the note said.