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Shopify stock target raised to $90 on strong 4Q outlook

Published 02/12/2024, 07:40 AM
Updated 02/12/2024, 07:40 AM
© Reuters.

On Monday, Truist Securities adjusted its price target for Shopify (NYSE: NYSE:SHOP) shares, raising it from $65.00 to $90.00, while maintaining a Hold rating on the stock. The revision comes ahead of Shopify's fourth-quarter earnings report, which is expected to be released tomorrow. Truist Securities anticipates a robust performance for the quarter, supported by positive indicators from the company's Cyber Week update and additional primary research.

The research conducted by Truist Securities, in partnership with their Data Science team, suggests that Shopify is poised to report significant fourth-quarter gross merchandise volume (GMV) growth. This projection is based on data analysis which indicates a potential 3% increase over the consensus GMV forecast for Shopify in the fourth quarter of 2023. According to the data, Shopify's GMV for the quarter could reach $74.3 billion, surpassing the consensus estimate of $72.1 billion and Truist's own previous estimate of $70.3 billion.

The anticipated GMV of $74.3 billion would represent a quarter-over-quarter growth of approximately 32% for the fourth quarter of 2023. This growth rate is consistent with the growth Shopify experienced in the same quarter of the previous year and marks a slight acceleration from the 29% quarter-over-quarter GMV growth reported in the fourth quarter of 2021.

The firm believes that such a strong finish to the quarter could lead to increases in both subscription and merchant solutions revenue, as well as non-GAAP operating profit. The raised price target to $90 reflects a higher assumed valuation for Shopify, driven by the company's sustained business momentum.

Truist's analysis is based on their card sales data, which provides insights into consumer spending and sales trends. The data points to a robust conclusion of the fourth quarter for Shopify, suggesting the company is likely to exceed market expectations with its upcoming earnings report.

InvestingPro Insights

As Shopify (NYSE: SHOP) gears up to release its fourth-quarter earnings report, the company's stock performance and financial metrics are under the spotlight. With Truist Securities recently lifting its price target on Shopify shares, investors are keenly watching for signs of sustained growth and profitability.

InvestingPro Data shows a significant market capitalization of $116.71 billion USD, highlighting Shopify's substantial presence in the market. Despite the company not being profitable over the last twelve months, with a P/E ratio of -100.82 and an adjusted P/E ratio for the last twelve months as of Q3 2023 at -406.32, investors have witnessed a high return over the last year, with a 1 Year Price Total Return as of Y2024.D43 at 87.83%. The revenue growth for the last twelve months as of Q3 2023 stood at a robust 26.8%, indicating a healthy expansion in Shopify's business operations.

The InvestingPro Tips further enrich the narrative, with Shopify being recognized as a prominent player in the IT Services industry and experiencing significant return over the last week. These factors, combined with the company's liquid assets exceeding short-term obligations and a moderate level of debt, suggest a strong foundation for potential future profitability. Moreover, analysts predict the company will turn profitable this year, an anticipation that could fuel investor confidence if realized.

For investors seeking more in-depth analysis, there are additional InvestingPro Tips available on https://www.investing.com/pro/SHOP. These tips can provide valuable insights into Shopify's stock price movements, which are known to be quite volatile, and its trading patterns, such as trading near its 52-week high and at a high Price / Book multiple.

To gain access to these insights, investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering a more comprehensive understanding of the company's financial health and market position. With 16 additional InvestingPro Tips listed on InvestingPro, there's a wealth of knowledge to be uncovered for those looking to make informed investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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