Shopify upgraded to Outperform by CIBC World Markets

CIBC World Markets analyst Todd Coupland recently moved his rating on Canadian e-commerce giant Shopify (Shopify Stock Quote, Charts, News, Analysts, Financials NYSE:SHOP) from “Neutral” to “Outperformer,” saying the path ahead looks better, while SHOP’s share price is looking more attractive.

Shopify posted record numbers for Black Friday/Cyber Monday (BFCM) this year, showing a 19 per cent increase in sales on its platform to $7.5 billion worldwide. Shopify said 52 million consumers purchased from companies on SHOP’s platform, representing a 12 per cent rise over 2021’s numbers. (All figures in US dollars.)

“This year, Black Friday Cyber Monday showed us once again that consumers are voting with their wallets to support the independent brands they love,” said Harley Finkelstein, President of Shopify, in a November 29 press release. “We saw record level shopping happening across all channels this weekend, proving businesses that meet their customers where they are, whether that’s online or in-person, will earn their loyalty in return.”

Coupland said the BFCM results were better than expected, providing a boost of confidence in the analyst’s forecast on SHOP.

“Our own expanded web traffic analysis of Shopify merchants affirms our view and also showed Q4 growth of 12 per cent. Finally, a number of key issues are setting up to resolve themselves, including a possible integration agreement with Amazon on Buy with Prime (BWP) that would benefit Shopify’s merchants and Shopify itself. For these reasons we recommend investors buy its shares,” said Coupland on Monday, according to a Globe and Mail report.

After a good nimber of years of extraordinary growth, Shopify’s stock has been hammered over the past 12 months, losing roughly 78 per cent of its value between last November and May of this year. SHOP has since then made little progress and is currently looking at a year-to-date return of negative 70 per cent.

But Coupland sees upside from here, maintaining in his report a $50.00 target price, which at press time represented a projected one-year return of 16 per cent.

“Recall that in Q3, Shopify indicated that an ‘immaterial’ number of Shopify merchants currently use BWP. The primary reasons are clunky integration and security risks around customer data. In our view, Shopify’s talks with Amazon could yield a mutually beneficial solution that helps their merchants and contributes to Shopify’s GMV growth,” Coupland said.