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On Tuesday, BofA Securities analyst Brad Sills increased the price target on Shopify (NYSE:SHOP) to $140 from $134, while reiterating a Buy rating on the shares. According to InvestingPro data, Shopify is currently trading near its 52-week high of $123.41, having delivered an impressive 73% return over the past six months. The stock has maintained strong momentum with a market capitalization of $156 billion, reflecting its position as a prominent player in the IT Services industry. Sills acknowledged Shopify’s Q4 results, indicating that the company’s strategic investments are effectively driving balanced growth. The company’s robust financial health is evident in its "GREAT" overall rating from InvestingPro, supported by strong revenue growth of 23.47% and positive earnings expectations for the coming year. He noted that Shopify’s first quarter outlook for the fiscal year 2025 does not include any potential effects from tariffs, due to the current uncertainties. This omission presents a risk to the fiscal year 2025 estimates.
The analyst pointed out that the de minimis exemption, which applies to orders under $800, should limit the impact on Shopify’s Gross Merchandise Volume (GMV), estimating that the average order value is less than $170. This exemption suggests that most of Shopify’s transactions will not be affected by tariffs.
Sills reaffirmed the Buy rating and raised the price objective to $140, citing improved GMV and growth in merchant solutions as the key drivers. The new price target is based on 66 times the company’s forecasted free cash flow (FCF) for calendar year 2026, up from the previous multiple of 65 times. The company currently trades at a P/E ratio of 112.68, reflecting high growth expectations. Additionally, when adjusted for a 29% two-year compounded annual growth rate (CAGR), the target represents a 2.2x multiple, which is above the software Growth at a Reasonable Price (GARP) group average of 1.4x for an 18% growth rate. For deeper insights into Shopify’s valuation metrics and growth potential, investors can access comprehensive analysis through InvestingPro’s detailed research reports, which cover over 1,400 top US stocks.
The analyst’s valuation reflects confidence in Shopify’s ability to sustain a growth rate of over 25%, which justifies the premium compared to its peers in the software GARP group. This assessment of Shopify’s growth potential and resilience in the face of potential tariff impacts is reflected in the maintained Buy rating and the increased price target.
In other recent news, Shopify has been in the spotlight with several analysts reiterating their positive outlook on the company. KeyBanc Capital Markets maintained its Overweight rating on Shopify, forecasting significant international revenue growth, potentially exceeding $4 billion by 2026. This growth is expected to be driven by consistent expansion in the EMEA and APAC regions, contributing to around 32% of Shopify’s total revenue by 2026.
RBC Capital Markets also maintained its Outperform rating on Shopify, indicating a healthy fourth quarter performance. The firm’s analysis suggests that Shopify’s Gross Merchandise Volume (GMV) and margin strength will likely exceed market expectations. However, RBC advised caution due to potential weaker first quarter guidance.
Loop Capital Markets maintained a Buy rating on Shopify, based on positive feedback from a quarterly survey of Shopify merchants and the successful adoption of Shopify’s AI tools. The firm also highlighted a 24% increase in GMV during the Black Friday to Cyber Monday period, indicating promising fourth-quarter earnings.
In addition, RBC Capital Markets named Shopify as one of its top picks for 2025, citing its growth potential in next-generation commerce platforms and high profitability. RBC also predicted that Shopify, representing a significant 52% of the Info-Tech sub-sector, will be a major factor in the sub-sector’s success. These recent developments underscore the positive outlook for Shopify among industry analysts.
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