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Oppenheimer has sustained its optimistic outlook on Shopify shares (NYSE:SHOP), maintaining an Outperform rating and a $90.00 price target.
The firm's recent dialogue with Shopify's Head of Investor Relations, Carrie Gillard, revealed that the company is experiencing merchant growth that surpasses its second-quarter pace. Shopify plans to increase its workforce modestly to bolster this growth.
The company is currently not focusing on maximizing its near-term take rate, which is the percentage of revenue Shopify earns from each transaction on its platform.
Instead, Shopify is enduring pressure on its take rate due to the expansion of its enterprise solutions, point-of-sale (POS) systems, and international operations. However, management expects the take rate to improve over time as they increase product attachment.
Shopify's updated partnership with PayPal (NASDAQ:PYPL) will now include U.S. PayPal branded wallet transactions in its Gross Payment Volume (GPV), with revenues being recognized on a gross basis, rather than as a third-party (3P) transaction. This change is expected to provide a clearer picture of the company's transaction volumes and revenue.
In other recent news, Shopify has witnessed a flurry of analyst activity following its strong Q2 performance, which saw a significant 25% year-over-year revenue growth.
Redburn-Atlantic revised its rating on Shopify stock from Neutral to Buy, setting a new price target of $99.00, citing the company's robust market share growth potential. The firm also anticipates substantial enterprise merchant wins for Shopify by 2025, further solidifying its market presence.
Cantor Fitzgerald initiated coverage on Shopify shares with a Neutral rating and a price target of $70.00, acknowledging the company's potential for margin expansion and consistent Gross Merchandise Volume growth. Roth/MKM maintained a Buy rating on Shopify, emphasizing the company's potential to scale its operations effectively. In contrast, Piper Sandler retained a Neutral stance, focusing on the company's sales and marketing expense growth.
Loop Capital raised its price target for Shopify to $80, while Mizuho Securities increased its price target to $68, citing the company's strong Q2 performance. However, Citi reduced its price target to $90 despite maintaining a Buy rating.
Morgan Stanley also expressed confidence in Shopify's future financial performance by raising the company's price target to $85.
InvestingPro Insights
Shopify's strategic initiatives and market performance can be further illuminated with insights from InvestingPro. With a current market capitalization of $101.6 billion, Shopify is a significant player in the IT Services industry. The company's Price/Earnings (P/E) ratio stands at 80.04, which may seem high, but it is trading at a low P/E ratio relative to near-term earnings growth, indicating potential for investors who are eyeing growth prospects.
InvestingPro Tips suggest Shopify's stock price has been quite volatile, which could be a consideration for risk-averse investors. However, analysts predict the company will be profitable this year, a sentiment supported by a net income expected to grow this year. These factors may contribute to the positive outlook maintained by Oppenheimer.
For those seeking more comprehensive analysis, InvestingPro offers additional tips on Shopify, including insights on valuation multiples and profitability metrics. With a total of 18 InvestingPro Tips available, users can access a breadth of information to make informed investment decisions.
Finally, the company's strong return over the last three months, with a 21.05% increase, aligns with the optimistic sentiment expressed by investors and analysts alike. This performance, coupled with the expected profitability and growth in net income, positions Shopify as a company worth watching closely in the current fiscal year.
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