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On Wednesday, Mizuho (NYSE:MFG) Securities adjusted its price target on Shopify (NYSE:SHOP) shares, raising it from $105.00 to $110.00 while maintaining a Neutral rating on the stock. Currently trading near its 52-week high of $125.95 with a market capitalization of $160 billion, InvestingPro analysis suggests the stock is trading above its Fair Value. The adjustment follows Shopify’s robust fourth-quarter performance in 2024, which saw the e-commerce platform exceed expectations in gross merchandise volume (GMV), revenue, and free cash flow (FCF).
Shopify’s Q4 results demonstrated significant growth across various key initiatives, regions, and merchant sizes, contributing to its overall outperformance. With a robust revenue growth of 23.47% over the last twelve months, the company’s GMV, revenue, and FCF surpassed analyst predictions by 2%, 3%, and 7%, respectively. Despite these positive results, the first quarter revenue guidance for 2025 was set to match expectations, taking into account several headwinds including the transition from one-month to three-month subscription paid trials, foreign exchange fluctuations, and the impact of a leap year.
The company’s management reasserted its commitment to sustaining a high-teens FCF margin level, which was achieved in 2024 with a ¾18% FCF margin and $1.6 billion in generated FCF. The focus remains on reinvesting in the business to fuel future growth, especially considering the significant untapped potential in international markets and up-market opportunities. InvestingPro data reveals the company maintains excellent financial health with a current ratio of 7.1, indicating strong liquidity to support its growth initiatives. Subscribers can access 18 additional ProTips and comprehensive analysis in the Pro Research Report.
While Mizuho recognizes the potential for Shopify’s continued growth, the firm also notes that the recent surge in the company’s share price may already account for some of the anticipated gains. Trading at a P/E ratio of 77.35, the stock appears richly valued, aligning with Mizuho’s stance. As a result, Mizuho believes the stock is currently fairly valued, prompting the decision to maintain a Neutral stance despite the slight increase in the price target. This new target reflects modestly higher estimates based on Shopify’s recent financial performance and future prospects.
In other recent news, Shopify has been the focus of several analyst firms, with each adjusting their price targets following the company’s fourth-quarter results for 2024. JMP Securities raised its price target to $135, citing the company’s impressive revenue growth and strong financial performance, including a 26% year-over-year increase in Gross Merchandise Volume (GMV). TD Securities increased its target to $130, noting Shopify’s effective execution and potential for sustained momentum as it expands its international presence. Stifel adjusted its outlook to $120, highlighting Shopify’s ongoing expansion and execution of its growth strategy. Canaccord Genuity raised its target to $140, pointing to Shopify’s attractiveness to larger brands and its successful expansion into new areas. Lastly, BofA Securities lifted its target to $140, noting improved GMV and growth in merchant solutions as key drivers. These recent developments offer insights into the current investor sentiment surrounding Shopify.
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