Amazon a "next-generation" Wal-Mart: Cowen

June 30 (Reuters) - Cowen and Co upgraded Amazon.com Inc (AMZN.O: Quote, Profile, Research) to "outperform" from "neutral" and said it expects the online retailer to increase its market share in the United States over time.

"In our view, Amazon is a next-generation Wal-Mart, and we believe the company's focus on lower prices and a superior shopping experience versus online and offline competitors will result in substantial share gains over time," analyst Jim Friedland said.

Amazon's overall share of U.S. retail sales is only 0.3 percent, compared to 7.7 percent for Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research), Friedland said.

The analyst expects market share gain to be driven by greater penetration of non-media categories, higher frequency of orders per customer due to growing adoption of Amazon Prime

-- a discount shipping program -- and reinvestment of profits -- a discount shipping program -- and reinvestment of profits from high-margin revenue streams into lower prices.

The company's aggressive investment in search, site content, customer service and digital distribution have given it a sustainable competitive advantage, the analyst added.

Friedland expects Amazon's adjusted operating profit to grow at a five-year compounded annual growth rate of 20 percent, driven by top-line growth, not cost cutting.

Amazon shares were up slightly at $83.70 in pre-market trade on Tuesday. They closed at $83.03 Monday on Nasdaq.