Shopify (NYSE:SHOP) ticked higher in trading after J.P. Morgan analyst Reginald Smith initiated coverage of SHOP stock with a Buy rating and a price target of $74. The analyst’s price target implies an upside potential of 17.4% from current levels.
JP Morgan Analyst’s Rationale
The analyst highlighted the Canadian e-commerce company’s “product range, ease of use, and scale” as providing a competitive edge. Moreover, Smith commented that considering the size of the e-commerce market and Shopify capturing only 11% of it, a vast untapped opportunity remains for the company. The analyst added that if the company increases its market share by one percentage point, it could mean $600 million in additional annual revenues.
According to Smith, the company’s higher investment in research and development compared to its peers gives it an added competitive edge.
However, SHOP’s Q1 results failed to cheer investors as it swung to a surprise loss of $0.21 per share, while analysts expected earnings of $0.09 per share.
Is SHOP a Buy Stock?
Analysts remain cautiously optimistic about SHOP stock, with a Moderate Buy consensus rating based on 16 Buys and 14 Holds. Year-to-date, SHOP has declined by more than 15%, and the average SHOP price target of $76.80 implies an upside potential of 20.6% from current levels.
