This analyst just upgraded Shopify

ATB Capital Markets analyst Martin Toner upgraded Shopify (Shopify Stock Quote, Chart, News, Analysts, Financials, TSX:SHOP) to “Outperform” from “Sector Perform” on Feb. 10, maintaining his C$250.00 price target, citing improving structural leverage, long-duration growth visibility, and what he views as an increasingly attractive risk-reward profile.

“We believe Shopify is growing into its high multiples as its margins ramp over the medium to long term,” Toner said, adding that the company is “well positioned to be a capital-light beneficiary from AI” at a time when much of the broader SaaS and mega-cap tech landscape is grappling with margin pressure from rising infrastructure spend.

Toner forecasts compound annual growth rates through 2034 of 26% for GMV and 27% for consolidated revenue, driven by continued merchant additions and improving monetization. His long-term GMV outlook of roughly US$2.3-trillion by 2034 assumes what he described as “tremendous success” for the platform, supported by Shopify’s track record of product innovation and execution.

In the near term, Toner expects margins to remain relatively stable as Shopify prioritizes growth investment, but sees meaningful upside longer term. He models free cash flow margins improving from about 15.6% in fiscal 2025 to roughly 27.6% by 2034, a trajectory he said is realistic given gross margins in the low-50% range and ongoing spending needs in sales, marketing, and R&D.

The upgrade is also underpinned by several near- and medium-term catalysts. Toner pointed to Shopify’s “structural operating leverage,” the emerging potential of its agentic commerce stack, and a favourable read-through from Meta Platforms’ sharply higher Q1/26 revenue guidance, which he believes could support Shopify’s own near-term outlook.

“At current levels, investors can own the de facto winner in ecommerce, growing 25%-plus, with a strong free cash flow trajectory,” he said.

Shopify is scheduled to report fourth-quarter results on Feb. 11.

Toner said Shopify should generate $1,406-million in Adjusted EBITDA on revenue of $11,452-million in fiscal 2025, with those figures evolving to $1,333-million in Adjusted EBITDA on revenue of $14,261-million in fiscal 2026. His C$250.00 target implies a return of roughly 56%, based on a discounted cash flow valuation using a 9.8% discount rate and 4.0% terminal growth rate, equating to about 15.3 times EV/EBITDA and 4.9 times EV/revenue.

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