William Blair analyst Arjun Bhatia has maintained their bullish stance on SHOP stock, giving a Buy rating today.
Arjun Bhatia has given his Buy rating due to a combination of factors including Shopify’s performance exceeding expectations in the first quarter across gross merchandise volume (GMV), revenue, and free cash flow (FCF). Despite the disappointment in the company’s second-quarter revenue guidance, which was only slightly below consensus, Bhatia recognizes the company’s strength in these key performance indicators. Moreover, while the revenue guidance reflects a deceleration in growth, it is attributed to the timing of price increases on Shopify’s Plus plan and macroeconomic softness in Europe, rather than underlying weaknesses in Shopify’s business model or market position.
Additionally, Bhatia’s outlook takes into account the company’s strategic investments in marketing to foster long-term sustainable growth, which he believes is justified given Shopify’s significant market opportunity and leading position within the industry. Although these investments may raise concerns about near-term profitability and the pace of future margin expansion, Bhatia sees the current market reaction as an overcorrection. Thus, he views any resultant weakness in Shopify’s stock price as a favorable buying opportunity, underpinned by the expectation that the Plus plan’s price increases will positively impact the latter half of the year and the firm’s robust long-term positioning in the market.
In another report released today, Roth MKM also maintained a Buy rating on the stock with a $77.00 price target.
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Shopify (SHOP) Company Description:
Founded in 2004, Canada-based Shopify, Inc. operates a cloud-based commerce platform designed for small and medium-sized businesses. Its software is used by merchants to run business across all sales channels, including web, tablet and mobile storefronts, social media storefronts, and brick-and-mortar and pop-up shops.
