Analyst Starts Neutral Coverage On Shopify Due To Valuation

While Shopify Inc SHOP has strong long-term earnings growth prospects, these seem to be “fully reflected” in its current share price, according to Loop Capital.

The Analyst

Loop Capital’s Anthony Chukumba initiated coverage of Shopify with a Hold rating and price target of $420.

The Thesis

Shopify offers a robust multichannel commerce platform at very attractive price points, which translates to “a compelling merchant value proposition,” Chukumba said in the note.

He added that Shopify’s total addressable market is both large and fast growing and that the company is “uniquely positioned” to benefit from the expected high growth of ecommerce globally.

The analyst said that Shopify's total addressable market expands further due to its efforts to increase brand awareness, service more large enterprise customers through Shopify Plus and expand internationally by developing localized websites.

Chukumba believes that the company has “plenty of opportunities” to provide a larger array of products and services to increase merchant retention on its platform and grow its revenue stream.

These long-term earnings growth prospects are already fully reflected in the stock, the analyst said, while recommending to wait for “a more attractive entry point.”