A strong Black Friday and Cyber Monday performance by Shopify (TSX, NYSE:SHOP) has Industrial Alliance Securities analyst Blake Abernethy raising his target price on the stock.
On Monday, Shopify reported that during the peak of Black Friday sales more than a million dollars per minute was flowing through the company’s platform. The company noted that last year’s peak was just $555,716.
“Small businesses are the foundation of the global economy, and the impressive amount of growth we saw on Black Friday goes to show that more and more shoppers want to buy from independent entrepreneurs,” said COO Harley Finkelstein. “Shopify’s focus is to set up our merchants for success, especially during this busy time of year. That’s why we provide them with resources, tools and functionality to confidently grow their businesses and produce stellar shopping experiences for their customers. The results from this year propel us forward to keep making commerce better for everyone.”
Abernethy says Shopify isn’t cheap, but has earned its lofty share price.
“We believe Shopify is maintaining its strong SMB competitive position and has a rapidly growing opportunity with Shopify Plus,” the analyst says. “In our view, Shopify can sustain its high organic growth rate for the next few years, thus justifying a premium multiple. Abernethy added: “Upon reviewing our forecasts, we have decided to marginally increase our merchandise sales estimates.
In a research update to clients today, Abernethy maintained his buy rating, but raised his one-year price target on Shopify from $110.00 to $115.00, implying a return of 10.9 per cent at the time of publication, including dividend.
Abernethy thinks Shopify will generate Adjusted EBITDA of $20.2-million on revenue of $661.5-million in fiscal 2017. He expects those numbers will improve to EBITDA of $49.5-million on a topline of $962.8-million the following year.