We are more bullish than ever on Shopify, says Mackie Research

Following his attendance at Shopify’s (Shopify Stock Quote, Chart, News: TSX, NYSE:SHOP) “Unite 2018 ” event in Toronto, Mackie Research Capital analyst Nikhil Thadani is feeling bullish about the company’s prospects.

From May 7-9, Shopify hosted its partner and developer conference in Toronto. Thadani says this was a big time event that does nothing less than help put Toronto on the global tech map.

“We got an inkling for how meaningful Unite 2018 would be waiting in line the day before the event to pick up our badge — attendees had to wait outside the venue as the premise where badges were being handed out was filled over capacity,” the analyst notes. “We are thankful to SHOP for highlighting Toronto positively to the global tech community, a welcome change after multiple data-points and pitch decks highlight Toronto’s relatively low tech wages and could discourage tech talent from locating here.”

The Mackie analyst says negativity around the stock seems to be waning.

“SHOP stock is up >12% since Q1 results last week, when we suggested investors ignore short term noise around the stock price/Q1 results and accumulate for the long-term,” he says. “Yesterday’s SHOP event has increased our conviction in SHOP continuing to deliver superior investor returns over the long term. SHOP is even more relevant to the Canadian tech ecosystem at a time when there is a paucity of new high quality Canadian tech vehicles for public market investors to participate in wealth creation. SHOP trades at ~10x 2019 Sales (in effect, lower, given the company’s history of revenue outperformance) vs. high growth SaaS names at ~9x, relative multiples have increased ~1x since SHOP’s Q1 results.”

In a research update to clients today, Thadani maintained his “Buy” rating and one-year price target of $170.00 on Shopify, implying a return of 18.6 per cent at the time of publication.

The analyst thinks SHOP will generate EBITDA of $38.0-million on revenue of $1.01-billion in fiscal 2018. He expects those numbers will improve to EBITDA of $56.6-million on a topline of $1.33-billion the following year.