Since he initiated coverage on the stock on March 1, Shopify (TSX, NYSE:SHOP) has raced to nearly meet his price target. But National Bank Financial analyst Richard Tse thinks there is still upside in the Ottawa-based ecommerce player.
Tse spent the day at Shopify’s annual partner conference and shared his thoughts.
Shopify kicked off its annual partner conference today – Unite 2017. If we were to take anything away from the keynote sessions it was that everything we heard with respect to Shopify’s platform plans this year points to fortifying its moat. And while we’ve only “live” on the name since March 1st, the newsflow momentum has driven the name quickly towards our target. The question is – is this run over? In our view, no, and what we heard from the keynotes only goes to drive the investment thesis laid out in our in-depth report titled Add This To Your Shopping Cart (covered by Cantech Letter here).
In a research update to clients today, Tse maintained his “Buy” rating and one-year price target of (U.S.) $80.00 on Shopify, implying a return of 5 per cent at the time of publication.
Tse thinks Shopify will generate EBITDA of negative $5.3-million on revenue of $602.1-million in fiscal 2017. He expects these numbers will improve to positive EBITDA of $27.5-million on a topline of $860.8-million the follwoing year.
“Bottom line, we remain bullish on SHOP and reiterate our Outperform rating and US$80 target price,” says Tse. “We continue to believe Shopify is early in this rapidly growing e-commerce market with a market share of ~2%. Like other disruptive leaders, we believe the upside in the stock comes from the underlying fundamental growth as we look beyond the short term.”