Shopify gets price target raise to $42.00 at Paradigm

Following the company’s second quarter results, Paradigm Capital analyst Kevin Krishnaratne has raised his price target on Shopify (Shopify Stock Quote, Chart, News: TSX:SH, NYSE:SHOP).

On Wednesday, Shopify reported its Q2, 2016 results. The company lost (U.S.) $8.43-million on revenue of $86.6-million, a 93 per cent topline increase over the same period a year earlier.

“We are pleased to report our fourth consecutive quarter of year-on-year revenue growth of greater than 90 per cent,” stated CFO Russ Jones. “We continued to excel on both layers of our business model in Q2. The strong growth in new merchant adds and even stronger growth of their sales indicate that the Shopify platform is meeting the growing demand for multichannel retail in ways that no other software can.”

Krishnaratne says Shopify’s most recent results are evidence of the momentum it is building by employing multiple channels and services.

“Shopify’s vision to enable commerce wherever consumers may be is benefitting the company on several fronts,” says the analyst. “Merchant adds impressed at +25K versus our +19K estimate, reflecting Shopify’s lead in mobile and social. Shopify is seeing GMV over social growing at even faster rates than on online stores. The addition of Apple Pay and Android Pay in Q2 should help drive increased sales over mobile, an increasingly relevant retail channel. We expect the omni-channel strategy, which will see the much-anticipated enabling of Amazon Marketplaces this year, to drive 2016 revenue gains of +80% y/y.”

In a research update to clients today, Krishnaratne maintained his “Buy” rating on Shopify, but raised his one-year price target on the stock from $37.00 to $42.00, implying a return of 14 per cent at the time of publication.