Morgan Stanley strategist Denny Galindo and his team made a series of changes to the firm’s U.S. all-cap growth portfolio.
MS strategists opened two new positions – Ulta Beauty (NASDAQ:ULTA) and Atlassian (NASDAQ:TEAM), while removing positions in Coherent (NYSE:COHR) and Monster Beverage (NASDAQ:MNST).
The investment banking titan also increased its position in Amazon (NASDAQ:AMZN) as it believes the tech behemoth is “well positioned for AI.”
Moreover, analysts say potential revenue reacceleration will help increase the portfolio’s consumer discretionary exposure while adding EPS growth at a reasonable price.
Their analysts rate AMZN stock with an Overweight rating, while the price target of $175 per share offers about 27% upside potential.
“We last increased AMZN in July of 2023 because of its leadership in Cloud services with exposure to AI and accelerating EPS as AWS growth reaccelerates and advertising continues to grow,” the analysts wrote in a client note.
“We are now slightly increasing exposure to AMZN for three reasons. First, AMZN is a quality business that is well positioned for AI.”
Another good reason to own Amazon is the fact that most institutional managers are underweight AMZN. Hence, they may “increase positions if AWS revenues reaccelerate and AMZN continues to gain share in advertising.”