Shopify (SHOP) is being tipped to attract more blue-chip customers in the months ahead to keep its “exceptional” revenue growth surging.
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Shopify Enters Rare Rule-of-50 Camp
Five-star TipRanks-rated analyst Arjun Bhatia of William Blair has a $122.04 price target on SHOP stock and an Outperform rating. Bhatia said Shopify’s Q4 results, which revealed revenue growth accelerating beyond expectations to 31% and free cashflow margin of 22% “puts the company in a rare Rule-of-50 camp.” He said the revenue growth was exceptional for a company of its size – market value of $155 billion – and was the fastest rate the company had grown at since the fourth quarter of 2021.
Bhatia, in particular, highlighted its “upmarket expansion” bringing in larger enterprise brands such as Reebok, Crocs (CROX) and Warner Music Group (WMG). “We believe the enterprise motion is just getting started and see room for this to accelerate in coming quarters as Shopify takes share from custom-built and legacy commerce systems,” he said. “We believe key growth drivers like enterprise, international, B2B, offline, and Shop Pay will continue to drive robust revenue growth.”
Shopify Expanding Overseas Presence
He did mention some potential headwinds for Shopify such as the risks of an economic downturn, competition in the market and exposure to small businesses. However, overall he continues to be bullish on Shopify as it “takes more share in the e-commerce market in segments ranging from enterprise to entrepreneurs.” Fellow five-star TipRanks-rated analyst Daniel Chan of TD Securities was equally enthusiastic upping his price target on SHOP stock from $100 to $130 and maintaining a Hold rating. He pointed out its potential for sustained momentum as the company expands its international presence.
Is SHOP a Good Stock to Buy?
On TipRanks, SHOP has a Moderate Buy consensus based on 21 Buy, 12 Hold and 2 Sell ratings. Its highest price target is $175. SHOP stock’s consensus price target is $123.53 implying an 0.05% downside.
