SHOP stock target slashed at TD

Count Daniel Chan amongst the Shopify (Shopify Stock Quote, Chart, News, Analysts, Financials NYSE:SHOP) non-believers.

The TD analyst, On October 12, cut his price target on Canada’s darling tech firm from $70 to $60, while maintaining his “Hold” rating on the stock.

In the report, Chan explained why he’s not bullish on Shopify.

“We believe it could take time for Shopify to meaningfully grow its enterprise presence, and the opportunity may not be as material as some investors are hoping for,” the analyst argued. “We believe Shopify’s success with SMB merchants has largely been due to its comprehensive, fully integrated platform, making it easy for merchants to start and grow their businesses. This value proposition may not resonate as strongly with enterprises which have complex IT systems and vast resources to piece together best-of-breed components for their unique needs. We also believe that the enterprise competitive landscape is more challenging. … Our channel checks suggest Shopify is chipping away at the enterprise market, but not gaining significant market share yet.”

On August 2, SHOP reported its Q2, 2023 results. The company lost (US) $1.3-billion with Adjusted Operating Income of $146-million.

“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.”

Shares of Shopify on the NYSE closed Wednesday, October 12 at $54.24.