Following the company’s most recent results, ATB Capital analyst Martin Toner is feeling more bullish about Shopify (Shopify Stock Quote, Chart, News, Analysts, Financials TSX:SHOP).

On November 2, SHOP reported its Q3, 2023 results.

SHOP posted gross profit of $901-million on revenue of $1.7-billion, a topline that was up 25 per cent over the same period last year.

“We’re extremely pleased with our financial performance this quarter, which is a testament to the resilience and adaptability of our platform and our merchants,” said CFO Jeff Hoffmeister. “Our results showcased the durability of our business model as we delivered a compelling combination of both top-line growth and profitability, with revenue growing 25 per cent year-over-year and free cash flow margin reaching 16 per cent. We will continue to operate with discipline, thoughtfully investing in the huge opportunities ahead across regions, products and channels to help merchants capture every opportunity every step of the way.”

Toner says Shopify is not a cheap stock, but it is one he thinks will go higher still.

“Shopify reported Q3/23 consolidated revenue of $1,714mm, up 25% y/y and beating consensus of $1,672mm,” the analyst wrote. “Shopify’s merchants generated $56.2bn of gross merchandise value (GMV), beating consensus of $54.3mm. Merchant solutions revenue grew 24% to $1,227mm, beating consensus of $1,198mm. Gross margin of 52.6% represented a 410bp y/y improvement and beat consensus by 50bp. Adjusted operating income of $271mm beat consensus of $162mm. Management provided Q4/revenue growth guidance in the high-teens, and expects free cash flow (FCF) margin to also be in the high-teens, compared to the 16% achieved in Q3/23. Reaching profitability sooner than expected has a positive impact on our target price and the top-of-funnel strength of results driven by enterprise customers give us more confidence in the duration of growth. Despite the demanding valuation, we see further near-term upside to Shopify’s shares.”

In a research update to clients November 3, Toner maintained his “Outperform” rating on SHOP, but raised his one-year price target on the stock from $95.00 to $105.00, implying a return of 27.9 per cent at the time of publication.

Toner thinks SHOP will post Adjusted Operating Income of $742-million on revenueof $6.98-billion in fiscal 2023. He expects those numbers will improve to Adjusted Operating Income of $1.37-billion on a topline of $8.7-billion the following year.