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On Thursday, RBC Capital Markets adjusted its outlook on Shopify stock (NASDAQ:SHOP), reducing the price target to $125 from the previous $145. The firm maintained its Outperform rating on the e-commerce company despite the change. The revision by RBC Capital analysts stems from anticipated growth challenges linked to the recent imposition of tariffs and the removal of the de minimis exemption, which allows small shipments to enter the United States tax-free. According to InvestingPro data, Shopify has demonstrated robust growth with a 25.78% revenue increase over the last twelve months, though 18 analysts have recently revised their earnings expectations downward. The company maintains a strong market position with a market capitalization of $108.25 billion.
The RBC Capital analyst, Paul Treiber, provided insight into the decision, noting the inflationary effects of these trade measures on Shopify’s operations. "Reducing estimates and target on tariff headwinds; We are reducing our financial estimates and lowering our price target on Shopify from $145.00 to $125.00," Treiber explained. He further elaborated on the potential impact, saying, "We believe Shopify is likely to face growth headwinds over the next several quarters, as a result of the inflationary impact of tariffs and the removal of the de minimis exemption."
Despite the lowered price target, RBC Capital Markets continues to see Shopify as a favorable investment in the long run. Treiber commented on the company’s position, stating, "Shares are likely to remain volatile and valuation may be pressured in the near-term. We’re maintaining our Outperform recommendation, as Shopify is one of the most compelling long-term organic growth stories in our coverage." This view is supported by InvestingPro’s analysis, which rates Shopify’s overall financial health as "GREAT" with a score of 3.17. While the stock trades at a relatively high P/E ratio of 53.05, InvestingPro’s Fair Value analysis suggests the stock is currently slightly undervalued. Subscribers can access 12 additional ProTips and comprehensive valuation metrics in the Pro Research Report.
The analyst’s remarks indicate a belief in Shopify’s enduring growth potential despite short-term market challenges. The revised financial estimates and price target reflect the current economic landscape’s influence on Shopify’s business, with the expectation of ongoing market fluctuations and valuation adjustments. This volatility is reflected in the stock’s Beta of 2.82, while analyst price targets currently range from $80 to $175, highlighting the market’s divided outlook on the company’s near-term prospects.
Shopify, known for providing a platform for businesses to set up their online stores, has been navigating a complex global trade environment. The company’s ability to adapt to these changing conditions and maintain its growth trajectory will be closely watched by investors and market analysts alike.
In other recent news, Shopify has seen several adjustments to its stock price targets by various analysts. Cantor Fitzgerald reduced Shopify’s price target to $80, maintaining a Neutral rating, with expectations of revenue reaching the high-end of prior guidance despite a projected slowdown in gross merchandise volume (GMV) growth. Loop Capital also lowered its target to $120 but retained a Buy rating, citing the strategic use of artificial intelligence (AI) as a factor for optimism in Shopify’s financial health. Meanwhile, JMP Securities kept its price target at $135, highlighting Shopify’s focus on AI integration and maintaining a Market Outperform rating.
Baird adjusted its target to $110, keeping an Outperform rating, and noted Shopify’s asset-light model as a protective factor against economic downturns. However, the firm revised its revenue forecast to $10.8 billion for 2025, which is below the consensus estimate. Wolfe Research made a significant cut to Shopify’s target, setting it at $90 while maintaining an Outperform rating, noting concerns about high valuation multiples and exposure to discretionary spending sectors. Despite these varying outlooks, Shopify’s commitment to AI and new product launches remain focal points in the analysts’ discussions. These developments reflect the current market conditions and the potential challenges and opportunities for Shopify.
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