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On Wednesday, Piper Sandler analyst Clarke Jeffries increased the price target for Shopify stock (NYSE: NYSE:SHOP) to $104 from the previous $94, while maintaining a Neutral rating on the company’s shares. The adjustment reflects Shopify’s continued strong performance, particularly in international markets. According to InvestingPro data, the stock has shown remarkable momentum with an 80.93% return over the past six months, trading near its 52-week high of $125.95.
Shopify exhibited several positive trends in the fourth quarter of 2024, including a reacceleration of revenue growth at 31% year-over-year, an increase in Gross Merchandise Volume (GMV) by 26% from the previous year, and an improved take-rate, which rose by 227 basis points, a 5% year-over-year increase. Additionally, the company achieved a post-pandemic high for Free Cash Flow (FCF) margin at 22%. The company’s strong financial position is reflected in its excellent current ratio of 7.1, indicating robust liquidity, and its GREAT Financial Health score on InvestingPro.
The analyst highlighted Shopify’s success in expanding its global presence, noting a second consecutive year of international revenue growth exceeding 30%. Now, half of Shopify’s customer base is located outside the United States and Canada. The Europe, Middle East, and Africa (EMEA) region was particularly notable, with a 35% revenue growth, reaching a scale of $1.7 billion in 2024.
Despite these positive indicators, Jeffries pointed out Shopify’s cautious commentary regarding near-term profitability expansion. The company is prioritizing investment in key areas and aims to maintain its current level of FCF profitability for the near future. This approach, according to Jeffries, suggests that Shopify’s stock may experience limited movement, constrained by a valuation that already anticipates a growth profile of over 20% for the medium term. For deeper insights into Shopify’s valuation and growth prospects, InvestingPro offers an extensive Pro Research Report with comprehensive analysis and 18 additional ProTips.
In conclusion, the revised price target of $104 is based on post-fourth-quarter revisions. However, Piper Sandler’s stance remains Neutral, given the expectation that Shopify’s shares will be range-bound for the time being. This aligns with InvestingPro’s Fair Value analysis, which suggests the stock is currently trading slightly above its intrinsic value.
In other recent news, Shopify has been the subject of multiple analyst reports, each offering a unique perspective on the company’s financial performance and future prospects. JPMorgan, for instance, has raised its price target for Shopify to $124, maintaining an Overweight rating, following the company’s impressive volume and revenue growth. Meanwhile, Truist Securities has maintained a Hold rating, highlighting Shopify’s strong performance amid challenging economic conditions, but noting the company’s premium valuation. Scotiabank (TSX:BNS) has also raised its price target for Shopify to $120, maintaining a Sector Perform rating, citing strength in Gross Merchandise Volume in North America.
Cantor Fitzgerald has maintained its Neutral rating on Shopify, with a price target of $120, pointing out the company’s robust performance in Q4, but expressing concerns regarding the company’s growth and profitability trajectory in the upcoming quarters. Lastly, Mizuho (NYSE:MFG) Securities has raised its price target for Shopify from $105 to $110, also maintaining a Neutral rating on the stock, following Shopify’s robust Q4 performance in 2024.
These recent developments indicate a generally positive outlook for Shopify, with analysts acknowledging the company’s strong performance and growth potential, but also noting certain challenges and uncertainties. It’s important to note that while these analyses provide valuable insights, they are ultimately the subjective assessments of the respective firms and should be considered as part of a broader investment strategy.
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