Loop Capital upgrades Shopify to Buy on AI initiatives

Loop Capital upgraded Shopify (SHOP) to Buy from Hold with a price target of $140, up from $110, implying 23% upside from current levels. The firm believes investors are under-appreciating how Shopify is utilizing artificial intelligence to not only better serve its merchants but also internally. Shopify will be able to grow its revenue at a “much faster rate” than its operating expenses for the foreseeable future, which will result in operating and free cash flow margin expansion and a higher valuation, the analyst tells investors in a research note. Shopify’s AI initiatives will drive profit margin expansion as well as a higher valuation, contends Loop.