Morgan Stanley views Amazon credit card as latest threat to retailers

With Amazon (AMZN) recently renewing and expanding its branded credit card product, Morgan Stanley argued Thursday that the move could signal both a new revenue stream for the ecommerce giant and the latest threat for an already troubled retail sector. MORGAN STANLEY SEES AMAZON CREDIT CARD PUSH: Morgan Stanley analyst Brian Nowak and team argued Thursday that Amazon's relaunched credit card "presents a new threat to retailers" and a high-margin revenue stream for the ecommerce giant. Nowak reminds investors that Amazon renewed its card partnership with JPMorgan (JPM) Chase in mid-January and upped its rewards program, which the analyst believes "speaks to Amazon's increasing focus on the potential benefits of growing its credit card business." Offering a base case prediction that Amazon's credit card business will reach $900M in operating income by 2020, Nowak says his firm's AlphaWise surveys in February indicate that a greater card presence for Amazon could continue to drive consumers away from traditional retail: "Our AlphaWise data show that... this can support further Amazon retail share gains, as 33% of prospective new Amazon card holders plan to shop 'a lot more' at Amazon and 23% say they would shop 'a lot less' at other retailers." The analyst further warns that one of the "last lines of defense" for retail is store cards and the repeat purchases that they bring, with department stores such as JCPenney (JCP), Nordstrom (JWN), Macy's (M), Kohl's (KSS) being particularly reliant on the practice. PRICE ACTION: Shares of Amazon closed Thursday's session down 0.08% to $847.38, trading roughly in line with the market. JCPenney and Nordstrom fell 1.61% and 0.83%, respectively. Other publicly traded retailers include Target (TGT) and Wal-Mart (WMT).