Shopify will release its Q1 fiscal 2019 financials next Tuesday, with Krishanaratne saying the company’s platform is favourably leveraged to high-growth e-commerce trends.
“We see 2019 as benefiting from the company’s investments in Plus, International, and Product, in addition to industry trends in mobile and social commerce, which we think drives an acceleration in merchant additions (both in Plus and Core SMB),” Krishnaratne said in a research note to clients Friday.
“SHOP has had an impressive run to start the year with the stock up nearly 60 per cent. Our Buy rating reflects our positive bias toward Shopify as being the commerce platform of choice for SMB’s and big brands, on path to serve 1.0 million-plus merchants by the end of 2019 and coming off a 2018 that saw it cross the $1.0 billion revenue mark at an impressive growth rate of approximately 60 per cent,” he says.
The analyst is now calling for fiscal 2019 revenue of $1.514 billion, up from $1.477 billion, Non-GAAP operating income of $18.8 million, up from $18.4 million, and Adjusted EBITDA of $48.6 million. For fiscal 2020, he is calling for revenue of $2.015 billion, up from $1.905 billion, Non-GAAP operating income of $53.2 million, down from $72.2 million, and Adjusted EBITDA of $87.4 million.
For the Q1/2019, Krishnaratne is expecting revenue growth of approximately 48 per cent to $316.3 million (guidance was between $305 and $310 million) and gross profit growth of approximately 44 per cent to $178.8 million.
The analyst’s “Buy” rating comes with a $250.00 target which reflects an EV/Sales multiple of approximately 12.5x his 2020 sales estimate (previously approximately 10.5x). The target represents a projected return of 14.2 per cent at the time of publication.
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