Positive. Shopify upgraded to Buy rating, price target increased, strong growth and free cash flow.

From Investing.com: 2024-07-16 14:02:03

Bank of America analysts upgraded Shopify to a Buy rating and increased the price target to $82 from $78, citing strong growth and free cash flow conversion. Shopify’s GMV has consistently outpaced eCommerce growth, with a +25% CAGR over three years. The firm’s competitive advantages and operating margin improvements contribute to its positive outlook.

In addition, Shopify’s solid revenue growth is driven by high single-digit baseline eCommerce growth, market share gains, and disciplined expense management. The company has seen significant market share expansion, capturing a 4.9% share of the global eCommerce market in 2023 compared to 1.2% in 2017. Analysts project continued operating margin improvement and stable gross margins in the future.

Looking ahead, analysts forecast Shopify’s operating margin to rise to 17.4% by FY26, up from 14.3% in FY24. The firm’s commitment to disciplined headcount growth is expected to enhance operating leverage, leading to strong revenue and FCF growth. The revised price objective of $82 indicates a 28% return potential for investors.



Read more at Investing.com: Shopify turning a corner on balanced growth