Shopify’s Strong Fundamentals and Conservative Guidance Justify Overweight Rating and $85 Price Target

In a report released today, Andrew Bauch from Wells Fargo maintained a Buy rating on Shopify (SHOP – Research Report), with a price target of $85.00.

Andrew Bauch’s rating is based on his anticipation of persistent strong top-of-funnel trends and the potential for Shopify’s margin guidance to be overly cautious. Despite Shopify’s shares underperforming year-to-date compared to the S&P 500, Bauch maintains a positive outlook, expecting the company’s strategic positioning and fundamental trajectory to provide an attractive opportunity for investors. He suggests that concerns regarding a new investment cycle, as indicated by higher-than-anticipated operating expenses, are offset by the company’s favorable market position and the likelihood of continued robust performance.

Bauch underscores the potential for revenue upside, driven by healthy growth in daily active users on Shopify’s apps and potential merchant revenue increases following recent pricing adjustments. Furthermore, he believes that management has historically provided conservative guidance, and he projects an EBIT outperformance for the first quarter. The reiteration of the Overweight rating and the maintenance of an $85 price target are predicated on a multiple of 20 times the estimated 2025 gross profit, suggesting confidence in Shopify’s ability to scale profitably and deliver value to shareholders.

In another report released on April 19, Morgan Stanley also upgraded the stock to a Buy with a $85.00 price target.

TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.

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.