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Shopify shares are up more than 1% premarket, trading close to the $65 mark.
“Given our analysis of the reduction in force impact along with the sale of Shopify Fulfillment (Logistics/Deliverr), we see the potential for meaningful upside to operating income in 2Q23 and beyond,” wrote Shah.
“Based on the various scenario analyses we run, we see an upside case for FY23/FY24/FY25 op income of ~$700mn/$1.4bn/$1.9bn and a base case at ~$650/1.2bn/$1.5bn, respectively. Both scenarios compare to our current estimates of $436mn/$1.1bn/$1.5bn and Street $300mn/$650mn/$1.1bn.”
He added that their conversations with investors suggest buy-side sentiment remains around $600 million in FY23 and $1.2 billion in FY24.
“With shares +85% YTD and investors struggling to see upside from current levels, we remain Buy rated and believe a better understanding of the near-term profitability potential along with longer-term earnings power could help catalyze the shares,” the analyst concluded.
By Sam Boughedda
