Shopify stock rating reiterated at Buy by Benchmark on payment gains

Benchmark reiterated its Buy rating and $125.00 price target on Shopify (NASDAQ:SHOP) Wednesday, citing potential benefits from the company’s payment processing transitions. The target represents an 18% upside from the current price of $106.53. According to InvestingPro data, the company has delivered impressive returns, with the stock up nearly 66% over the past year.

The research firm noted that despite possible short-term disruptions in merchant activity and gross merchandise volume during the transition period, Shopify stands to gain significant advantages in the longer term. The company’s strong financial health score of "GREAT" on InvestingPro and robust revenue growth of 26.5% support this optimistic outlook.

Benchmark highlighted two primary benefits for Shopify: improved conversion visibility and data after the transition, which should enhance internal advertising effectiveness through features like Shop Campaigns, and increased payment monetization through Shop Pay.

The firm explained that as shoppers are directed to merchant sites powered by Shopify rather than third-party platforms, transactions previously using Meta Pay or PayPal (NASDAQ:PYPL) Express will likely shift toward higher Shop Pay utilization.

Benchmark concluded that Shopify maintains its existing economics on Facebook (NASDAQ:META) and Instagram shop transactions while gaining additional gross profit dollars from incremental Shop Pay transactions.

In other recent news, Shopify has released its Summer ’25 Edition, introducing over 150 upgrades designed to simplify the merchant experience. These enhancements include AI-driven features like the AI Store Builder and Horizon, which allow merchants to create custom storefronts with ease. The company has also revamped its Point of Sale app for improved navigation and added new functionalities to the Shop app to enhance the buyer’s experience. Meanwhile, DA Davidson has raised its price target for Shopify to $125, citing better-than-expected first-quarter 2025 results and highlighting artificial intelligence as a potential growth catalyst. The firm maintains a Buy rating, expressing confidence in Shopify’s market leadership and growth prospects. Cantor Fitzgerald, however, continues to hold a Neutral rating with a $91 price target, noting concerns about Shopify’s gross margins and subscription revenues. Despite these challenges, the firm believes Shopify’s overall outlook remains solid. Investors are closely monitoring these developments as Shopify navigates the competitive e-commerce landscape.

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