Workhorse Stock – Shopify Shares Have Swooned in 2021. Why One Analyst Just Turned Bullish.
stock has tumbled 28% since its February peak at just under $1,500 a share, pressured by concerns about how the e-commerce software company will be impacted by the reopening of retail stores as the pandemic fades and shifting investor preference for lower multiple shares.
Loop Capital analyst
sees opportunity knocking.
Chukumba on Tuesday lifted his rating on Shopify (ticker: SHOP) shares to Buy from Hold and kept his $1,400 target price. The stock was up about 2%, to $1,101.54, in afternoon trading.
“We continue to believe Shopify has a compelling merchant value proposition, which is further bolstered by the company’s growing ecosystem,” he wrote in a research note. “We expect Shopify to drive additional heady top-line growth and margin expansion as the company benefits from the continued secular shift to e-commerce and further exploits its myriad strategic initiatives,” including payments, shipping, point-of-sale software and other services.
“Shopify offers the leading multi-channel commerce platform at affordable price points,” he continues. “Merchants can utilize Shopify’s intuitive user interface to set up a professional looking online store in 15 minutes or less. Despite Shopify’s ease of use and affordable prices, the company’s platform offers security, scalability, and reliability that is normally only available to businesses with enterprise-level budgets. We believe Shopify’s growing ecosystem of third-party applications, developers, consultants, and agencies makes the platform even more valuable and the company’s flywheel event more powerful.”
Chukumba concedes the stock isn’t statistically cheap. He notes that Shopify trades at 27 times on an enterprise value to estimated 2021 revenue basis, “a significant premium to other market-leading software as a service providers.” But he thinks the premium is justified, “given Shopify’s much smaller scale …and more compelling long-term earnings growth prospects.”
Write to Eric J. Savitz at [email protected]