Morgan Stanley bullish on Amazon's plans to roll out Instant Video in Europe

Amazon is reportedly preparing to simultaneously launch the Prime Video platform in all three European countries before the end of the year, French newspaper Le Figaro said, following success in the UK and Germany.

The percentage of Prime members in the UK and Germany who list Instant Video as the main reason for joining Prime "is material", reaching 36% in the UK and 32% in Germany, Morgan Stanley said as it reiterated its 'overweight' rating on the stock.

"We are bullish about this potential roll-out as we believe Amazon's Prime Instant Video is a growing driver of Prime subscriber growth…in particular outside of the US."

Calculating that Amazon Prime members spend roughly four times more than non-Prime shoppers, Instant Video-driven Prime subscriber growth in France, Italy and Spain would likely lead to faster growth in international gross merchandise value.

"After all, Amazon’s business outside of UK/Germany/Japan is still relatively small, making up only ~17% of its total international retail business and ~1% of consumer spend in these current addressable countries compared to 3%-4% in its other large countries."

While the base-case price target was set at $800, a bullish case target of $950 is predicated on Amazon sustaining revenue growth of 19%-plus through 2019.