Why This Shopify Analyst Is Bearish, Even After Blockbuster Black Friday Performance

Shopify Inc SHOP shares were down slightly in trading on Tuesday, following the rally after the company delivered a stellar Black Friday performance.

The stock rallied this year, driven by the exit of the logistics business and “newfound emphasis on profitability,” according to Piper Sandler.

The Shopify Analyst: Clarke Jeffries downgraded the rating for Shopify from Neutral to Underweight, while reducing the price target from $58 to $56.

The Shopify Thesis: While the company was clearly a commerce platform giant, with more than 2 million merchants driving more than $200 billion in gross merchandise value (GMV), the stock currently had “an untenable valuation in our view,” Jeffries said in the downgrade note.

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The growth and profit assumptions backed into the stock “are too aggressive based on our market understanding,” the analyst added.

“Macro, execution, or near-term demand are not catalysts for our rating change, but we believe fundamentals are set to moderate in 2024 as the company clears events unique to 2023,” he further wrote.

SHOP Price Action: Shares of Shopify had declined by 0.75% to $73.24 at the time of publication Tuesday.

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