Shopify: Canaccord Raises Price Target To $1,450 Off Back Of Strong Earnings

Shopify (NYSE: SHOP) reported second-quarter financials on July 28th. The company is keeping the US tech earnings beat train going, topping the analyst consensus for the quarter but came in just short of the street high estimate of $1.13 billion. The company reported revenues of $1.12 billion, growing revenues 56.7% year over year. Their gross profit also grew 65.5% to $620.9 million. Gross margins came in at 55.5% while operating margins came in at 12.5%. The company reported a net income of $879 million or earnings per share of $6.90.

Multiple analysts raised their 12-month price target bringing the 12-month average price target to $1,641.09, up from the $1,559.21 average the day before earnings. The street high sits at $2,000 from National Bank, while the lowest comes in at $825 from Veritas Investment. The company has 41 analysts covering the stock, with 10 analysts having a strong buy, 14 have a buy rating, 15 have a hold, and a single analyst has a sell and a strong sell rating.

Canaccord Genuity raised their 12-month price on Shopify to $1,450, up from $1,350, and reiterated their hold rating on the stock. They are all-around impressed around the companies ability not to have a “post-COVID blip,” where pent-up demand pulls consumers away from eCommerce and into the physical stores or locations.

Canaccord believes the biggest driver of growth was GMV, which continues to grow faster even as other parts of the business normalize. They write, “Our big takeaway from this call is that Shopify’s positioning as the global operating system for commerce is seemingly becoming even more strategic.”

They add that GMV and MRR were the biggest drivers of growth, with MRR growing 67% year over year to $95 million, and was primarily driven by new merchant additions and increased penetration. While GMV grew to $42 billion, increasing by 40% year over year and almost $5 billion sequentially. This growth can be attributed to a few things such as the penetration of payments, merchant adoption of capital and shipping as well as partner-related revenue.

Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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