Wall Street Weighs In On Shopify's Q4 Earnings

Shopify Inc SHOP reported some impressive holiday sales numbers, but the stock took a big hit after guidance fell short of the market’s expectations.

Shopify revenue was up 54.3 percent to $343.86 million in the fourth quarter. But with shares up 30 percent year-to-date, traders took profit on the stock when 2019 guidance fell a bit short of consensus estimates.

Several analysts have weighed in on Shopify since its earnings report. Here’s a sampling of what they’ve had to say.

Mixed Quarter

Bank of America analyst Brad Sills said Shopify Plus demonstrates some impressive traction, but decelerating growth and rising customer acquisition cost are red flags for investors.

“With the shares trading at 9x our C20E sales estimate, decelerating growth, and lacking margin expansion, we see no upside,” Sills wrote in a note.

Wells Fargo analyst Timothy Willi said strong merchant acquisition trends and record Cyber Monday and Black Friday sales were highlights of the quarter.

“While ’19 adj. income guidance was significantly lower than expected, the company outlined 3 key areas (Int’l, brand expansion and product innovation) where it continues to invest heavily to capitalize on long-term opportunity,” Willi wrote.

Conservative Guidance

Guggenheim analyst Ken Wong said the big numbers justified the stock’s recent momentum, and 2019 guidance wasn’t as bad as the market seems to think.

“While the initial optics of sub-40s growth may be viewed negatively, we think the big 4Q beat and history of conservatism will eventually carry more weight,” Wong wrote.

Raymond James analyst Brian Peterson said investors should expect several moving parts for Shopify in 2019.

“While management cites numerous areas for investment during 2019, we suspect an outlook calling for flattish operating income will ultimately prove conservative,” Peterson wrote.

Ratings And Price Targets

• Bank of America has an Underperform rating and $155 target.
• Wells Fargo has an Outperform rating and $195 target.
• Guggenheim has a Buy rating and $200 target.
• Raymond James has an Outperform rating and $180 price target.

Shares traded down 1.8 percent to $172.30 at time of publication.

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