Stock market today: S&P 500 ekes out closing record high despite wobble in chips
Investing.com -- Loop Capital downgraded Shopify Inc (NASDAQ:SHOP) to Hold from Buy, citing valuation rather than any deterioration in fundamentals, while maintaining its $120 price target on the stock.
The firm noted that shares of the e-commerce platform provider have rallied 21% year to date, outperforming the Nasdaq Composite’s 9% gain and currently trading around 7% above Loop’s target price. The stock is also just below its 52-week high.
“Our downgrade is based on Shopify’s valuation, as opposed to a more bearish view of the company’s fundamentals,” analysts at Loop Capital said. It said that at 14.7 times their 2025 revenue estimate, the current valuation already reflects that optimism.
"We continue to believe Shopify is utilizing AI to not only better serve its merchants" analysts wrote
Loop continues to view Shopify’s use of artificial intelligence — under the Shopify Magic brand and across internal functions like customer service and finance — as a key driver of margin expansion over time.
The firm expects revenue to grow faster than operating expenses, supporting both operating and free cash flow margins.
Still, given the sharp run-up in the stock and elevated volatility, analysts said they would await a more attractive entry point before turning constructive again.
“We continue to believe the company is increasingly cementing its position as the dominant online, and increasingly, offline, retail operating system."