On Wednesday, Loop Capital raised its price target on shares of Shopify (NYSE: NYSE:SHOP) to $90 from the previous $80, while keeping the stock's rating at Hold. The adjustment comes as the firm's recent survey of Shopify merchants showed positive trends, prompting an increase in their third-quarter 2024 estimates for the company.
The survey conducted by Loop Capital revealed several encouraging signs among Shopify merchants. There was a noticeable sequential improvement in the use of sales channels and Merchant Solutions, as well as an uptick in sales trends and overall merchant satisfaction. These factors contributed to the firm's decision to revise its estimates upward for Shopify's performance in the third quarter of 2024.
Despite the positive survey findings and the raised estimates, Loop Capital has chosen to maintain a Hold rating on Shopify's stock. The firm's decision reflects a cautious approach due to the current valuation levels of Shopify shares. This suggests that while the company's near-term prospects appear favorable, the firm is not ready to change its long-term investment rating at this time.
The revised price target anticipates Shopify's upcoming earnings release. Investors and market watchers will be looking to the company's financial report to see if the improvements noted by Loop Capital's survey are reflected in Shopify's actual performance for the quarter.
Shopify, a leading e-commerce platform, enables merchants to set up online stores and sell their products. The company has been a key player in the digital commerce space and continues to evolve its offerings to meet the changing needs of merchants and consumers alike. The new price target set by Loop Capital is indicative of the firm's expectations for the company's continued growth and operational success.
In other recent news, Shopify's earnings and revenue have been a focal point for analysts. Baird maintained an Outperform rating on Shopify, raising the stock's price target to $90, citing robust growth in Shopify's core services. Citi also updated its outlook on Shopify, projecting an EBIT growth of 60% year-over-year, surpassing the consensus by over 20%. Oppenheimer maintained an Outperform rating on Shopify, while Redburn-Atlantic revised its rating from Neutral to Buy. Cantor Fitzgerald initiated coverage on Shopify shares with a Neutral rating.
In addition to these ratings, Shopify's Gross Merchandise Volume (GMV) is projected to reach approximately $645 billion by the fiscal year 2028, according to Citi. Redburn-Atlantic's forecast for Shopify includes a 29% net revenue compound annual growth rate (CAGR) from 2023 to 2026 and a 40% EBIT margin by 2026.
InvestingPro Insights
InvestingPro data and tips provide additional context to Loop Capital's analysis of Shopify. The company's market cap stands at an impressive $106.67 billion, reflecting its significant position in the e-commerce sector. Shopify's revenue growth remains strong, with a 23.18% increase over the last twelve months, aligning with the positive trends observed in Loop Capital's merchant survey.
An InvestingPro Tip indicates that Shopify's net income is expected to grow this year, which supports Loop Capital's decision to raise its price target. This expectation of profitability is further reinforced by another tip stating that analysts predict the company will be profitable this year.
Shopify's P/E ratio of 83.63 and its adjusted P/E ratio of 119.36 for the last twelve months suggest a high valuation, which may explain Loop Capital's cautious Hold rating despite the positive outlook. This high valuation is consistent with an InvestingPro Tip noting that Shopify is trading at a high earnings multiple.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips on Shopify, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.