Shopify is just getting started, National Bank says

Shopify’s (Shopify Stock Quote, Chart, News, Analysts, Financials NYSE:SHOP) Black Friday data tradition continued this week and National Bank Financial analyst Richard Tse said it underscores his bullish thesis on the stock.

On December 3, Shopify issued a press release noting that its merchants posted $11.5-billion in sales over the Black Friday-Cyber Monday weekend, reaching 76-million consumers.

“Shopify is transforming Black Friday weekend,” President Harley Finkelstein said. “What was once a doorbuster shopping moment dominated by legacy players is now a global commerce event that businesses of all sizes participate in. We’re amplifying the global entrepreneurial spirit by rallying behind our merchants, preparing them, and celebrating their impact on a global stage.”

Tse says this suggests that not only is SHOP healthy, but the consumer is too.

“In our view, this data provides some meaningful insights around the health of the consumer. On that, Shopify reported another record-setting BFCM with orders on its platform across the entire event totaling US$11.5 bln globally from the start of Black Friday in New Zealand through the end of Cyber Monday in California. That was up 24% Y/Y from US$9.3 bln in 2023 and up ~4.0x from pre-pandemic levels in 2019 as eCommerce continues to grow as a % of total retail sales and Shopify accelerates its push into omni-channel commerce.”

In a research update to clients December 3, Tse maintained his “Outperform” rating and price target of (US) $140.00 on SHOP.

“Bottom line, BFCM volumes and sales for Shopify suggest continued market share gains, underscoring the resilience of its platform,” the analyst concluded. “In our view, Shopify remains a leading on/offline Commerce disruptor, and we believe there exists a considerable runway for outsized growth driven by 1) International; 2) increasing take rate across new services; 3) large enterprise; and, 4) POS. Equally important, the recent FQ3 results highlight growing operating leverage helping drive a further re-rating of the stock (see our associated FQ3 results note Re-Rating on Operating Leverage). We reiterate our Outperform rating and target price of US$140; that DCF-based target implies a valuation of 16.5x EV/Sales on FY25E (unchanged).”