Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Shopify and Chewy cut at Wolfe on consumer weakness

Published 12/07/2022, 09:57 AM
Updated 12/07/2022, 10:07 AM
© Reuters.  Shopify (SHOP) and Chewy (CHWY) cut at Wolfe on consumer weakness

© Reuters. Shopify (SHOP) and Chewy (CHWY) cut at Wolfe on consumer weakness

By Senad Karaahmetovic

Shares of Shopify (NYSE:SHOP) and Chewy (NYSE:CHWY) are trading lower Wednesday after Wolfe Research analysts lowered ratings to reflect ongoing consumer weakness.

The analysts are taking a more cautious approach on the eCommerce sector, which they downgraded to Market Weight from Market Overweight. Moreover, the recent relief rally in some eCommerce stocks, including Shopify and Chewy, pushed them towards stepping to the sidelines.

“Our downgrade thesis for eCommerce is predicated on three factors: 1) given the high penetration (>20% in many western markets), eCommerce growth is likely to show high sensitivity to retail sales and consumer spending trends during the macroeconomic slowdown in 2023, 2) top-line growth for many companies in the space benefited from inflationary tailwinds in 2022, which should be a less significant factor in 2023, and 3) consensus estimates are still elevated in many cases, calling for acceleration vs. 2022,” the analysts explained in a note.

Despite taking a more cautious view on eCommerce, the analysts see opportunities in 2023 as long as investors take a selective approach. They reiterated Outperform ratings on Amazon (NASDAQ:AMZN) and MercadoLibre (NASDAQ:MELI) as these two offer “company specific themes and healthy fundamentals into 2023 with attractive valuations.”

The analysts also reiterated an Outperform rating on eBay (NASDAQ:EBAY) as shares trade at a “highly discounted valuation at these levels.”

Latest comments

"Investing in distruptive technologies" - the new hip way to say, "Investing in extremely risky assets"
Poor Cathy.   Literally and figuratively.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.