In the world of e-commerce platform providers, Shopify (SHOP) remains the gold standard for investors to pay attention to. The company's impressive competitive moat is something that long-time bulls such as myself have pointed out as reasons to own this stock over a long period of time.
www.barchart.com Of course, there's been bumpiness along the way for investors, and the above one-month chart speaks to this reality. With Shopify having given up what was previously some solid gains, investors have plenty to digest.
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Here's why one analyst from Stifel believes Shopify remains a clear “Buy” and could have 15% upside from current levels moving forward.
What's Behind This Price Target Increase?
Stifel analyst Parker Lane recently put forward an analyst note in which he raised his price target for Shopify from $110 per share (below where the stock is currently trading) to the $150 level. Such a move indicates Shopify could be undervalued presently, with this recent dip providing many “growth at a reasonable price” investors with good reason to own this name.
I think that's a view that makes sense, and Lane's logic is sound. His view is that Shopify has "a realistic path to 30%-plus revenue growth in 2026 and sustained mid-20s beyond," and this view is based on improving fundamentals. With more than $100 billion in gross merchandise volume (GMV) in the first quarter (up 35% over the same quarter the year prior), his view is that 30%+ growth rates could be in order for years to come.
www.barchart.com There's good rationale for this logic, considering Shopify's rather impressive growth rates we've seen for a very long time. And with this backdrop in mind, the e-commerce giant's fundamentals shown above do look relatively attractive.
Trading at just 80 times forward earnings (emphasis on the “just”), SHOP isn't a cheap stock, to be sure. However, this multiple is much lower than where the stock has traded in the past and is suggestive that investors are increasingly looking to downgrade the multiples they're willing to pay.
That said, as the saying goes, it's important for long-term investors to at least try to buy low and sell high. With this recent dip in the rearview mirror and plenty of growth seemingly on the horizon, the three-year outlook for Shopify is that this is a stock that could have a price-earnings-to-growth multiple that's around 1 times in three years time.
We'll have to see. But for now, there's clearly some solid bullish momentum investors can point to as reasons to own this name at a relatively depressed level. That's my view, at least.
What Do Other Wall Street Analysts Think?
I'm not the only talking head bullish on SHOP stock, and that's important to note. Indeed, investors should pay close attention to what the experts on Wall Street think about a particular name, and on that front, Shopify has some friends.
www.barchart.com Currently, Shopify's mean price target sits just above $150 per share, meaning Stifel is among the less-bullish analysts on the Street still. And with a Street-high price target of $200 per share indicating just how high this stock could be headed, if we do indeed see a reversal of investor optimism, there's a lot to like about where Shopify stock is positioned today.
Over the long term, I expect to see a continued push toward e-commerce lead to outsized upside for Shopify and other tech players in this fast-growing market. I think e-commerce is one of those market segments that has been beaten down by negative sentiment (mostly tied to the ongoing AI rollout), which should reverse over the long term. At current prices, I'd be a buyer.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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