Morgan Stanley‘s Scott Devitt today reiterates an Equal-Weight rating on shares of Amazon.com (AMZN), writing that investors underestimate the number of variable costs the company’s business has, costs that could hold back Amazon’s margins for longer than people realize.

“Our primary goal of the analysis was to reallocate variable costs that Amazon.com allocates below the gross profit line in order to better reflect the true direct segment margin,” writes Devitt.

He finds that while investors are dazzled with the “incremental gross margin” Amazon achieves, “Incremental gross margins exclude relevant, variable costs, which artificially inflate reported gross margins.”

Devitt, who sees Amazon increasing its adjusted Ebitda margin as a percentage of revenue from 4.5% this year to 4.9% next year, nevertheless thinks that “whether through direct marketing spend or discounted pricing on ancillary goods, 2012 may be a tough year for a margin expansion cycle to materialize.”

Devitt goes through each segment of the business, including so-called first party sales, or “1P,” and third-party sellers, “3P,” and “fulfilled by Amazon,” or FBA, sales, as well as the company’s collection of seller fees and its “Amazon Web Services” business.

1P sales, he finds, have a “direct segment” gross margin of 6%, below the company’s 22% average.

Amazon is not likely to see much improvement in that, he thinks, given its continuing to invest in hard assets:

We understand that fulfillment costs are fixed over the short-term but variable over the long-term, so to the extent Amazon.com over-invested in fulfillment centers over the past two years, investors may see some cost leverage there. However, conversations with management lead us to believe that the company plans its fulfillment-related capex for peak-need within any given fiscal year.

Likewise, Web Services has a 9% margin, which is consistent with what publicly traded Web hosting companies produce, he writes. And FBA sales have a 28% gross margin, and it would take a lot of growth in that business to make a positive impact on the overall gross margin, Devitt concludes:

FBA net sales will need to grow by ~50% in order to effect a 100 bps of consolidated segment margin expansion (this is after taking into account the February 2012 increase in FBA fees). The bottom line is that the two fastest growing business segments contribute the lowest margins after allocating variable costs into cost of sales

In the background of all of this, contends Devitt, is that the company’s “Kindle” e-book reader and tablet family will have rising advertising and marketing costs this year, and there will be pressure on the price of the device by new market entrants this year.

The Kindle will continue to gain e-reader market share, he thinks, rising to 63% this year from 61% last year, and to 64% next year. However, it faces a future similar to Apple‘s (AAPL) iPod, he thinks, but in a “more protracted fashion,” where the basic Kindle is increasingly outmoded by other devices, such as the smartphones, or Amazon’s own “KindleFire” tablet computer.