Shopify has double-digit upside, Industrial Alliance says

Ahead of the company’s first quarter results, Industrial Alliance Securities analyst Blair Abernethy is feeling expansive about Shopify (Shopify Stock Quote, Chart, News: TSX, NYSE: SHOP).

Before the market open on Tuesday, May 1 Shopify will report its Q1, 2018 results. Abernethy thinks the company will generate Adjusted EBITDA of negative $1.2-million on revenue of $201.1-million, compared to the street consensus of EBITDA of positive $300,000 on a topline of $202.3-million.

The analyst says he expects this seasonally weaker first quarter will reflect lower sequential merchant sales but will show continued rapid organic growth in its merchant customer base. He says there are several things that could shake the stock up on the horizon.

“We see several potential catalysts for the stock this year, including new platform partnerships, Shopify Plus traction with large companies, further take-up of the Shopify Capital offering, and tuck-in technology acquisitions.

In a research update to clients today, Abernethy maintained his “Buy” rating and one-year price target of $145.00 on Shopify, implying a return of 17.8 per cent at the time of publication, including dividend.

Abernethy thinks Shopify will generate Adjusted EBITDA of $38.0-million on $1.0-billion in revenue in fiscal 2018. He expects those numbers will improve to EBITDA of $70.6-million on a topline of $1.33-billion the following year.