Following the company’s first quarter results, National Bank Financial analyst Richard Tse has raised his price target on Shopify (Shopify Stock Quote, Chart TSX, NYSE:SHOP).
This morning, Shopify reported its Q1, 2019 results. The company lost (U.S.) 24.15-million on revenue of $320.5-million, a topline that was up 50 per cent over the same period last year.
“We’re off to an incredible start this year, as more merchants around the globe choose Shopify to start, grow and manage their businesses,” CFO Amy Shapero said. “Entrepreneurs and enterprises alike recognize that Shopify’s merchant-driven mission helps them build their most successful business and thrive in an ever-changing retail landscape. That’s why we continue to invest in our platform, expanding our product and feature set, and the overall Shopify experience — making commerce easier, more accessible and better for everyone, everywhere.”
Tse says this was clearly a great quarter for Shopify.
“Overall, the results and outlook were better than our expectations, particularly when it comes to revenue,” he notes. “If that weren’t enough, profitability was well ahead of expectations in the quarter. While we’d note, a lot of that earnings upside appears to have come care of a quarter push out in Shopify’s formerly announced brand investments, we believe it shows the potential operating leverage available in this model. Perhaps more importantly, when it comes to our investment thesis, based on underlying growth drivers of: 1) Merchant services (take-rate); 2) International; and, 3) Plus – all those drivers appeared to be maintaining, and in a number of cases, seeing accelerating critical mass.”
In a research update to clients today, Tse maintained his “Outperform” rating on Shopify, but raised his twelve-month target price on the stock from (U.S.) $250 to $270, implying a return of 11 per cent at the time of publication.
Tse thinks the company will post EBITDA of (All Figures USD) $38-million on revenue of $1.51-billion in fiscal 2019. He expects those numbers will improve to EBITDA Of $114-million on revenue of $1.99-billion the following year.