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On Friday, Stifel analysts reduced the price target for Shopify (NASDAQ:SHOP) shares from $120.00 to $100.00 while keeping a Hold rating on the stock. Currently trading at a P/E ratio of 73x and commanding a market capitalization of $118 billion, Shopify is showing signs of being overvalued according to InvestingPro analysis. The adjustment follows Shopify’s latest earnings report, which presented a smaller top-line beat than in previous quarters and gross merchandise volume (GMV) figures that were slightly below or in line with expectations.
The company’s earnings call highlighted concerns about the potential impact of tariffs, a significant topic of discussion. Management at Shopify indicated that recent business metrics have not shown a slowdown, supported by impressive revenue growth of 26.5% in the last twelve months. The company provided positive feedback on new solutions introduced to assist customers with navigating the complexities of duties and tariffs. InvestingPro data reveals that Shopify maintains excellent financial health with a "GREAT" overall score, suggesting strong resilience to market challenges.
Despite the current gross margin pressures due to payment mix and partnerships, which are affecting free cash flow (FCF) growth, Stifel’s analysts believe Shopify still has strong prospects for growth. They cite the company’s ongoing investment in a range of products and initiatives as a positive sign for its future performance, particularly in the context of broader e-commerce growth.
The analysts emphasized the importance of gaining more clarity on trade deals and their implications for GMV growth as a key area of focus for Shopify. This clarity is considered essential for understanding the company’s trajectory and assessing its value proposition to investors. The revised price target reflects these considerations as well as the current market conditions affecting Shopify.
In other recent news, Shopify’s first-quarter performance has been a focal point for analysts, with mixed adjustments to stock price targets and ratings. Cantor Fitzgerald raised its price target for Shopify to $91, maintaining a Neutral rating, following results that matched expectations for Gross Merchandise Volume (GMV) and Gross Profit (GP). The company projected mid-20% revenue growth for the second quarter of 2025, with a high-teens increase in GP dollars, although a shift in the Payments mix and PayPal (NASDAQ:PYPL) integration may compress margins. Truist Securities adjusted its price target to $95 from $100, maintaining a Hold rating, after Shopify’s first-quarter results exceeded revenue and earnings estimates, citing resilience amid macroeconomic uncertainties. Benchmark also revised its target to $125 from $150, retaining a Buy rating, due to cautious optimism about Shopify’s market share growth despite challenges in key sectors like fashion and beauty. Meanwhile, BMO Capital initiated coverage with an Outperform rating and a $120 target, highlighting Shopify’s improved growth and operating leverage post-logistics divestment. Shopify’s agility and adaptability continue to be seen as competitive advantages, potentially mitigating tariff-related disruptions.
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