SHOP stock price target chopped at Citi

Can Canadian market darling Shopify (Shopify Stock Quote, Chart, News, Analysts, Financials NYSE:SHOP) keep the party going?

No, says one U.S. analyst, who says it’s going to be a tough road in the consumer sector and SHOP is not immune.

As reported by The Globe and Mail, Citi analyst Tyler Radke on October 25 cut his price target on Shopify from (US) $77.00 to $62.00, while maintaining his “Neutral” rating.

The analyst who, cited a “softening” consumer backdrop, explained his reasoning in an update to clients.

“With uncertainty around interest rate hikes and cracks beginning to form in the U.S. consumer health profile, we are cautious on Shopify heading into FQ3 earnings due to its sensitivity to consumer discretionary budgets and higher SMB [small and medium-sized business] exposure,” Radke said. “We remain positive on the ability for Shopify to benefit from long-term consolidation in front office/commerce software and as e-commerce steadily gains more wallet share of overall retail spending.”

Shopify will report its Q3 results on November 2.

On August 2, Shopify reported its second quarter results. The company returned to profitability with Adjusted Operating Income of $146-million with revenue that grew by 31 per cent, year-over-year.

“Our business momentum has led to another quarter of strong financial results. We’re not just shipping products faster, but we are also expanding our global merchant base, all while improving our ability to generate greater free cash flow,” said president Harley Finkelstein. “As we lean into the new shape of Shopify, our focus remains on building the world’s best product to empower entrepreneurs and businesses everywhere.”

Shopify on the New York Stock Exchange closed October 24 at $52.35