Needham reiterates Buy rating on Shopify stock after strong Q3 results

Investing.com - Needham has reiterated its Buy rating and $180.00 price target on Shopify (NASDAQ:SHOP) following the e-commerce platform’s third-quarter financial results. Currently trading at $160.94, the stock appears overvalued according to InvestingPro Fair Value estimates, despite its "GREAT" financial health rating.

The company reported accelerating year-over-year Gross Merchandise Volume (GMV) growth of 32.0% in the quarter, marking the second consecutive quarter of acceleration and reaching the highest level since the COVID-19 pandemic period. This aligns with Shopify’s impressive revenue growth of 30.25% over the last twelve months.

North American sales drove most of the third-quarter outperformance, while Shopify’s international business showed meaningful growth as the company expands its payment solutions to new markets.

Monthly Recurring Revenue (MRR) growth reached 10.3%, a figure that remains tempered due to changes in the free trial basis, though Needham expects MRR growth to increase in the fourth quarter as Shopify laps these changes.

Despite the strong quarterly performance, Shopify shares faced modest weakness following a recent price run-up, which Needham attributes to fourth-quarter free cash flow margin coming in slightly below expectations due to payment timing issues, particularly related to taxes.

In other recent news, Shopify reported strong third-quarter 2025 earnings, surpassing analysts’ expectations. The company achieved an earnings per share of $0.3454, exceeding the forecast of $0.3345. Revenue also beat projections, reaching $2.84 billion compared to the anticipated $2.76 billion. Following these results, several analyst firms adjusted their price targets for Shopify. BMO Capital raised its target to $190, highlighting the company’s robust year-over-year growth in gross merchandise volume. DA Davidson increased its target to $195, citing Shopify’s recent agentic commerce announcements as a positive sign for future monetization opportunities. Canaccord Genuity also raised its price target to $185, noting the company’s excellent third-quarter performance and alignment of monthly recurring revenue with expectations. These developments indicate a positive outlook from analysts regarding Shopify’s recent performance and strategic initiatives.

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