By Tiernan Ray

Shares of Amazon.com (AMZN) are up $10.43, or 4%, at $269.58 after Morgan Stanley’s Scott Devitt today raised his rating on the stock to Overweight from Equal Weight, and assigned a $325 price target, after hiking his estimate for how much of the global e-commerce pie he thinks the company can make in coming years.

According to Devitt, based on the findings of a Morgan Stanley e-commerce “blue paper” released today, investors are underestimating how formidable the company’s distribution network is around the world, an asset that may help it win even in tough overseas markets such as China:

The most immediately-relevant takeaway from the report is that fulfillment will be the key to eCommerce success throughout the next cycle. Our conviction to upgrade Amazon.com is based on the international opportunity, but it is supported by the disparity between Amazon.com and other online / offline competitors’ fulfillment assets. Looking at the three countries where Amazon.com does not have a physical presence (Brazil, Russia and Australia), unreliable freight / logistics, low credit card penetration and low population density can all be cited as reasons why Amazon.com may not yet have fulfillment assets in those regions. However, when considering the countries where Amazon.com does have fulfillment assets, it is important to note that there is not a single other company in the world that operates in all of the same regions. Amazon.com appears to be redefining the fulfillment learning curve as it grows, and this may likely lead to sustainable barriers to any other global entrant.

Devitt’s estimate for total e-commerce sales globally in 2016 is $1 trillion. He now thinks Amazon can take $258 billion worth of the total “gross merchandise value,” or GMV, of that one trillion in 2016, which would produce $166 billion in net sales for Amazon. That’s higher than the $225 in GMV he had been predicting previously, and the $145 billion in net sales he had been modeling as a consequence. Amazon’s roughly 23% share of gross merchandise value would be up from what he estimates was probably 14% last year.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.