NEW YORK (TheStreet) -- Shares of Amazon.com Inc (AMZN) were rallying, up 2.5% to $434.45 in mid-morning trading Thursday, after analysts at Morgan Stanley raised their price target on shares of the ecommerce retailer to $520 from $450 earlier today.
The firm maintained its "overweight" rating, and cited bullish trends and multiple sources of potential upside for the increased price objective.
Analysts at Morgan Stanley believe the 2016 consensus gross profit view is too low.
Morgan Stanley said fulfillment costs per unit are falling for the first time since 2010, and will continue with a return to investment in 2016.
Analysts at the firm also raised gross profit estimates for Amazon by 1% for 2015, and increased forecasts by 2% for 2016.
Separately, eBay (EBAY) is planning to launch a new shipping service that rivals Amazon Prime in Germany later this year called eBay plus, The Wall Street Journal reports.
Last November, eBay was exploring delivery options for customers in countries including the U.S. and Germany, according to Reuters.
The new eBay plus program will offer free, fast shipping and returns for customers who pay between 15 to 20 euros, or about $16.68 to $22.25 a year.
Seattle, Wash.-based Amazon.com is an e-commerce company that sells a range of products and services through its various owned and affiliated websites.
Insight from TheStreet's Research Team:
Amazon is a part of Bryan Ashenberg's GrowthSeeker.com Portfolio. Here is what Ashenberg had to say about the stock in a recent weekly summary:
Amazon (Consumer Discretionary -- (AMZN) $425.24, 41 shares, 3.68%; $475 price target): Amazon's shares slid 2% this week. On Monday, The Wall Street Journal reported on Google's (GOOGL) plan to roll out a "buy now" button in ads located above their normal search results. We view this as typical competition and not anything near a game changer.
Amazon has proved that its execution warrants a premium valuation and that investors should distinguish it from the group. Amazon's recent quarterly results and the newfound information on the marked profitability of the Amazon Web Services (AWS) segment lead us to conclude that the stock is still undervalued. Despite the company's improved profitability -- and maybe even because of it -- we believe management will continue to spend heavily and invest to dominate the markets in which Amazon does business, and as AWS shows, management knows what they are doing and Wall Street will have to be patient.
We remain long-term bullish on the company as it continues to spend on growth initiatives, including Fire TV, Fire Phone, Prime Instant Video, Prime Music, grocery, international, Sunday delivery, Echo and new fulfillment and sorting centers that enable same-day delivery, at the expense of -- but not with total disregard for -- near-term profits.
Want more information like this from Bryan Ashenberg BEFORE your stock moves? Learn more about GrowthSeeker.com now.
Separately, TheStreet Ratings team rates AMAZON.COM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMAZON.COM INC (AMZN) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
You can view the full analysis from the report here: AMZN Ratings Report