Amazon is just getting started in the e-commerce and retail business, according to one Wall Street firm.

Piper Jaffray reiterated its overweight rating on the internet company's shares, predicting Amazon will generate strong sales growth this year.

"Amazon, despite its size and continued strong growth, is arguably still in the early innings of its share gain potential, even in the company's most penetrated market," analyst Michael Olson wrote in a note to clients Tuesday. "Most domestic internet users have a significant opportunity to increase their Amazon holiday wallet share allocation."

Olson increased his price target for Amazon shares to $1,400 from $1,200, representing 12 percent upside to Monday's close.

Piper Jaffray's survey of 1,000 U.S. internet users revealed that 50 percent of people allocated 10 percent or less of their holiday spending to Amazon. As a result, he estimated that the company had 4 percent market share of U.S. retail holiday spending in 2017.

"Considering the U.S. is Amazon's most penetrated market, we see this low-to-mid single digit market share as a significant positive," he wrote.

Olson forecasts Amazon will generate 28 percent sales growth in 2018.

Amazon shares rose 56 percent in 2017 versus the S&P 500's 19 percent gain.

The company's shares were up about 0.40 percent in early Tuesday trading after the report.