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On Tuesday, Benchmark analysts adjusted their outlook on Shopify (NASDAQ:SHOP) shares, reducing the price target to $125 from the previous $150, while still upholding a Buy rating for the company. Currently trading at $95.83, Shopify has shown strong momentum with a 27% return over the past year, despite trading at premium multiples according to InvestingPro analysis. The revision comes ahead of Shopify’s first-quarter earnings report scheduled for release before market open on Thursday, May 8, 2025.
The analysts expressed a cautious optimism regarding Shopify’s ability to continue gaining global market share and leveraging its customer base, which typically has a higher income. This demographic may help Shopify mitigate some of the broader economic challenges, such as macroeconomic fluctuations and tariff-related impacts. With a robust revenue growth of 25.78% and an impressive gross profit margin of 50.36%, InvestingPro data shows the company maintains strong fundamentals. However, observations of spending weaknesses, particularly in new customer growth and non-store U.S. retail sales in March, prompted a more conservative view of Shopify’s Gross Merchandise Volume (GMV) and subsequent revenue projections for the year 2025.
Benchmark’s revised stance also takes into account recent reports of retail media softness in key merchant categories for Shopify, including fashion and beauty, as indicated by data from Criteo. These sectors are crucial to Shopify’s ecosystem, and weakness in these areas could signify potential challenges for the e-commerce platform.
The lowered price target reflects an increase in the Weighted Average Cost of Capital (WACC) and trimmed revenue estimates. Despite the reduction in the price target, Benchmark maintains a positive outlook on Shopify’s stock, reiterating their Buy rating. The analysts have shared key discussion topics for the upcoming earnings call, which will likely provide further insights into Shopify’s performance and strategic direction amidst a changing retail landscape.
In other recent news, Shopify is preparing to release its first-quarter 2025 earnings, with analysts offering varied projections. Truist Securities adjusted its price target for Shopify to $100 from $120, maintaining a Hold rating due to modest reductions in revenue growth assumptions for the coming years. Conversely, BMO Capital Markets initiated coverage with an Outperform rating and a $120 price target, citing improved growth and operating leverage following Shopify’s divestment of its logistics operations. Meanwhile, KeyBanc Capital Markets reduced its price target to $105 from $140, while keeping an Overweight rating, expressing confidence in Shopify’s market share growth despite potential tariff challenges. Additionally, Shopify has announced details of its 2025 Annual General Meeting, which will take place in Ottawa, Canada, as part of its routine corporate governance practices.
In legal developments, a U.S. appeals court has revived a data privacy lawsuit against Shopify, with allegations of unauthorized tracking software installation on a consumer’s device. The 9th U.S. Circuit Court of Appeals ruled that Shopify’s actions were aimed at California, allowing the case to proceed in that state. This decision highlights ongoing legal challenges that Shopify faces in the realm of data privacy. The ruling has drawn support from a bipartisan group of states advocating for consumer protection, while the U.S. Chamber of Commerce backed Shopify, warning of broader implications for jurisdiction over internet-based platforms.
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