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Amazon won’t be able to compete with traditional carriers like FedEx as the costs of e-commerce increase over the next decade, according to one Wall Street firm.

FedEx’s shares have fallen nearly 10 percent over the past month after The Wall Street Journal reported that Amazon is preparing to launch its own delivery service. But Bernstein analyst David Vernon said the carrier may not have as much to fear as the market thinks.

He upgraded shares of FedEx to outperform Friday morning.

“The shift to e-commerce is increasing the demand for transportation services broadly and putting a lot of stress on labor markets … We believe the incumbent networks of UPS, FedEx, and USPS are uniquely positioned to deliver that next decade of growth,” Vernon wrote in a note to clients. “Delivering through Amazon clearly has a cost. For merchants fulfilling by Amazon, that cost is going up significantly this year.”

Shares of FedEx rose 1.4 percent in premarket trading Friday following the analyst’s note.

The analyst added that while Amazon Prime members enjoy “free” shipping, the company increased the price of the membership in January to $12.99 a month, up from $10.99 a month. Merchants fulfilling deliveries via Amazon are also likely to see an increase in fees in 2018, Vernon added.

“While many in the market lament that ‘free’ shipping will be dilutive to pricing, it does not seem to us that Amazon has any lack of confidence in its ability to charge more for shipping services,” the analyst explained. “Given that the clear majority of Amazon parcels are delivered by a commercial carrier, we think Amazon’s move to raise rate here is a lot more telling about the direction of future parcel pricing.”

In addition to upgrading shares, Vernon increased his price target on FedEx to $290 from $257, implying more than 18 percent upside over the next 12 months. He sees the stock gaining more than 28 percent over the next two years.

— CNBC’s Michael Bloom contributed to this report.