Needham analyst Anna Andreeva has maintained their neutral stance on SHOP stock, giving a Hold rating today.
Anna Andreeva has given her Hold rating due to a combination of factors including Shopify’s recent performance and future financial projections. While Shopify demonstrated strong momentum in the first quarter of 2024, capturing over 10% of U.S. e-commerce sales with a year-over-year increase, expectations from the investment community were set higher, suggesting that the results were not as robust as anticipated. Additionally, the company’s operating expenses are projected to rise in the second quarter, driven largely by marketing and summit-related costs, which could potentially reduce the earnings upside that investors were hoping for.
Moreover, the growth in Shopify’s high-tier Plus merchant contracts has not translated into the expected financial upside because these merchants opted to renew their contracts at the existing rates. This means that the anticipated positive impact on Shopify’s profit and loss statement from higher Plus pricing has not materialized at the level that standard plans did in the previous year. On the other hand, Shopify’s free cash flow margin exceeded projections, and the company continues to outperform in the EMEA e-commerce market despite some underlying macroeconomic challenges in the UK. These mixed financial indicators suggest that maintaining a Hold rating is a prudent decision at this time.
In another report released today, Stifel Nicolaus also maintained a Hold rating on the stock with a $65.00 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.
