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The price target goes to $65 per share, up from the prior $55.
Shopify shares are up over 35% in May after the company said it will cut 20% jobs and announced the sale of its Logistics business. Despite the downgrade call, the analysts remain bullish on the fundamentals.
“By eliminating a significant capex outlay via the sale of its Logistics business, expectations for Shopify’s medium-term FCF generation have dramatically improved GMV and monetisation trends also have positive momentum, and we continue to see upside to consensus estimates, with gross profit growth likely to accelerate over the next few quarters,” they wrote in a client note.
The higher price target also reflects a potential for the continuation of the rally in the near term, fueled by solid business momentum.
“The gross profit multiple has returned to pre-pandemic levels despite now delivering half the growth rate, and the growth-adjusted multiple looks high compared to peers, while there is still little in the way of earnings valuation support,” the analysts concluded.
Shopify shares are down 2.6% in premarket Tuesday.
