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On Tuesday, Truist Securities adjusted its price target for Shopify (NASDAQ:SHOP) shares, reducing it to $100 from the previous $120 while maintaining a Hold rating on the stock. According to InvestingPro data, Shopify currently trades at a P/E ratio of 61, reflecting its premium valuation in the market. The adjustment comes ahead of Shopify’s first-quarter 2025 results, which are set to be released this Thursday before the market opens. The company maintains a "GREAT" financial health score of 3.29 out of 5, suggesting strong fundamental performance despite the price target reduction.
Terry Tillman, an analyst at Truist Securities, cited modest reductions in Gross Merchandise Volume (GMV) and related revenue growth assumptions for 2025 and 2026 as the primary reason for the price target change. The company has demonstrated strong performance with 25.8% revenue growth over the last twelve months, reaching $8.88 billion. Despite anticipating relative strength and the potential for Shopify to exceed consensus estimates in the first quarter, Tillman noted concerns over uncertain global macroeconomic conditions and tariffs, which could affect Shopify’s merchants and consumer spending throughout the remainder of the year.
The analyst emphasized that although these factors were taken into consideration, no significant impact on Shopify’s operational efficiency is expected. Consequently, Tillman predicts that the company’s operating profits and Free Cash Flow (FCF) will not be meaningfully affected.
In his commentary, Tillman stated, "Ahead of Shopify’s 1Q25 results this Thursday before market open, we have made modest reductions to GMV and related revenue growth assumptions in 2025 and 2026. While expecting relative strength and upside potential to consensus in 1Q, we assume uncertain global macro/tariffs could cause some impact to Shopify’s merchants and related consumer spending as we move through the balance of this year."
Tillman concluded by reiterating the Hold rating and justifying the lowered price target, saying, "We assume the company maintains operational efficiency and thus no meaningful impact assumed to operating profits and FCF. Maintain Hold and lower our PT to $100, from $120 prior, on modestly lower rev ests and reduced valuation expectations." The company’s strong operational efficiency is reflected in its healthy current ratio of 3.71, while analyst targets range from $80 to $151 per share. For deeper insights into Shopify’s valuation and growth prospects, including 13 additional ProTips and comprehensive financial metrics, visit InvestingPro.
In other recent news, Shopify has been at the center of several significant developments. BMO Capital Markets initiated coverage on Shopify, assigning an Outperform rating with a price target of $120, highlighting the company’s improved growth and operating leverage after divesting its logistics operations. Meanwhile, KeyBanc Capital Markets adjusted its price target for Shopify to $105 from $140, maintaining an Overweight rating but noting potential risks from tariff headwinds. RBC Capital Markets also revised its price target downward to $125 from $145, citing anticipated growth challenges due to recent tariff impositions and the removal of certain tax exemptions.
Separately, Shopify announced details for its 2025 Annual General Meeting of Shareholders, scheduled to take place at its executive offices in Ottawa, Canada. This routine corporate governance event is part of the company’s ongoing transparency efforts with stakeholders. On the legal front, a U.S. appeals court revived a proposed data privacy class action against Shopify, which could influence how American courts assert jurisdiction over internet-based platforms. The court’s decision was supported by a coalition of 30 states, emphasizing the importance of enforcing consumer protection laws.
These recent developments reflect the dynamic landscape in which Shopify operates, with various factors influencing its strategic and operational decisions. Investors and analysts are closely monitoring how the company navigates these challenges, particularly regarding its growth prospects and market positioning.
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