Stifel analyst Scott Devitt launched coverage of Shopify with a Buy rating and a $1,200 price target.
David Kawai/Bloomberg
Shopify shares have suffered through their own bear market, falling 27% in the past seven weeks as investors cashed in some of the gains they made during the pandemic. Last year, the stock soared as retailers rushed onto the company’s cloud-based e-commerce software platform after shuttering their stores.
But Stifel analyst Scott Devitt sees an opportunity: He launched coverage of Shopify (ticker: SHOP) on Wednesday with a Buy rating and a $1,200 price target.
“We view Shopify as the leading e-commerce platform for helping entrepreneurs, SMBs [small- and medium-size businesses], and enterprises create and manage their businesses online,” Devitt wrote in a research note. “We believe the company is positioned for sustainable growth supported by international expansion, growth in enterprise merchants, and the development of additional products and services supporting increased monetization.”
Devitt notes the stock, at $1,200, would trade at a premium to software peers—the stock trades for about 33 times current year estimated sales— but he sees that as justified, given the size of the opportunity, sustainable growth supported by international expansion, the addition of services, and attractive margins.
He points out that the pandemic has accelerated adoption of e-commerce, while bringing many companies online for the first time. “We believe Shopify is the best positioned platform to benefit from the ongoing digital transformation given its breadth of merchant solutions, subscription plans designed to scale alongside merchants’ growth, technology infrastructure, expertise, and worldwide brand recognition,” he wrote.
In afternoon trading, Shopify was up 5.7%, to $1,108.20.
Write to Eric J. Savitz at [email protected]
