Shopify Down But Not Abandoned by Its Analysts

Jon C. Ogg

When the stock market has been clobbered so hard, investors are hoping to find any good news or positive companies that may be holding up in this COVID-19 battered economy. Shopify, Inc. (NYSE: SHOP) has been touted as “the next Amazon” more than a few times, and if the forced stay-at-home economy is good for Amazon then it should also be good for Shopify. If only things were so simple.

Shopify shares were down over 10% in late afternoon trading on Thursday after the company suspended its prior 2020 guidance the prior evening. What Shopify did not indicate in its disclosure about guidance was the degree to which the vast number of small and mid-sized businesses will be able to keep operating through or after the recession.

24/7 Wall St. has tracked multiple analyst calls on Shopify. Some are remaining positive, others are backing further away. As a reminder on any and all analyst calls, no single research report should ever be the sole basis for a decision to buy, sell or hold a stock.

BofA Securities reiterated its Underweight rating and the firm lowered its price objective down to $350 from $400 after it suspended 2020 guidance. According to the call, the suspended guidance underscores the cyclical nature of Shopify’s business as being driven by discretionary consumer spending and variable payments business. The firm also noted that Shopify is trading at a steep 16 times expected 2021 revenues (versus 8 for peers) along growing risks to estimates.

Mizuho maintained its Neutral rating and curt its target down to $350 from $500 in that call.

National Bank maintained its Outperform rating on Shopify, but the firm cut its price target down to $550 from $600.

Raymond James maintained its Outperform rating but the firm still slashed its price target down to $400 from $600.

Other firms still have not made ratings changes, but Credit Suisse has a Neutral rating and it had previously raised its target to $575 from $450 based on valuations back in mid-February.

CFRA had reiterated its Sell rating back on March 27 and Morningstar had reiterated a Sell rating back on March 24.

Shares of Shopify closed down over 7% at $384.67 on Wednesday, but the mid-afternoon trading on Thursday was down another 11% with shares bouncing up and down from the at $340.00 level. The current share price is down over 42% from its all-time high of $593.89 seen in February.