FEATURE
It Isn’t Too Late to Buy Shopify Stock, Analyst Says. He Sees 26% Upside.
Shopify should continue to benefit from the acceleration in e-commerce that has been triggered by the Covid-19 pandemic, Wedbush analyst Ygal Arounian wrote.
Shopify should continue to benefit from the acceleration in e-commerce that has been triggered by the Covid-19 pandemic, Wedbush analyst Ygal Arounian wrote in a research note Wednesday morning, as he raised his rating on the stock to Outperform from Neutral.
The analyst raised his target on Shopify (ticker: SHOP) to $1,300 from $998, and concedes that he is a little late on his bullish call. But he still sees more upside ahead.
“We continue to see strength in Shopify’s near-term ability to capture share in e-commerce, and continue to see the pull-forward in e-commerce trends as being sustainable over time, driven in large part by ongoing changes to consumer habits,” Arounian wrote. “Those views haven’t changed, and they have kept us positive on the Shopify story despite our downgrade to Neutral last June. While we clearly missed material upside in shares over that time period, we have continued to view Shopify as a best-in-class operator, remaining on the sidelines primarily from what we viewed as valuation that already fairly reflected the underlying opportunity.”
Arounian addressed the fact that the upgrade comes with the stock and valuation near all-time highs.
“We continue to like the short-term trends and Shopify’s position to capture them, but this call is a longer-term one in addition to those trends, driven by Shopify’s position to capture share of the total retail [addressable market] as it builds out its retail OS,” he wrote. “In looking for a new entry point opportunity we were focused on looking for either a pullback or product launches that can sustain out-size growth and market opportunity over time.” He sees two significant growth opportunities in the company’s push into both fulfillment and point-of-sale software.
The analyst said he sees a $4 billion opportunity for the company in fulfillment by 2024 and $29 billion by 2029. For point of sale, he sees a $2 billion opportunity by 2025.
Shopify stock was up 0.5% at $1,030.39 near midday Wednesday. The Dow Jones Industrial Average was up 1.5%.
Write to Eric J. Savitz at eric.savitz@barrons.com
