Services

Why Analysts Are Chasing Shopify Higher

Chris Lange

Published: February 17, 2018 8:25 am

Last Updated: January 12, 2020 3:17 am

Shopify Inc. (NYSE: SHOP) released its fourth-quarter earnings report before the markets opened on Thursday. While the online retailer was left holding the bag in this most recent quarterly report, most wouldn’t be able to tell just by looking at the reaction from analysts. Sure the bottom line was not pretty in this report, but Shopify has proven that it can grow in other metrics. Not to mention its shares have more than doubled over the past year.

Here 24/7 Wall St. has included some of the main highlights from the earnings report, as well as what analysts are saying about the stock after the fact.

The company said that it had a net loss of $0.03 per share on $222.8 million in revenue, compared with consensus estimates that called for earnings of $0.05 per share $209.28 million in revenue. The same period of last year reportedly had no earnings and revenue of $130.38 million.

During this quarter, Subscription Solutions revenue grew 67% to $93.9 million, driven by rapid growth in monthly recurring revenue (MRR). Merchant Solutions revenue grew 74% to $128.9 million, driven primarily by the growth of gross merchandise volume (GMV).

Specifically, MRR at the end of the quarter was $29.9 million, up 62% compared with $18.5 million a year ago. Shopify Plus contributed $6.3 million, or 21%, of MRR, compared with 17% of MRR last year.

GMV for the fourth quarter was $9.1 billion, an increase of $3.6 billion, or 65%. Gross payments volume grew to $3.5 billion, which accounted for 39% of GMV processed in the quarter, versus $2.2 billion, or 39%, for the fourth quarter of 2016.

Looking ahead to the first quarter, the company expects to see an operating loss in the range of $6 million to $8 million with revenues between $198 million and $202 million. The consensus estimates call for a net loss of $0.01 per share on $195.11 million in revenue for the quarter.

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Here’s what analysts had to say after the report:

• Baird has an Outperform rating and raised its target to $158 from $110.
• Barclays raised its price target to $120 from $95.
• Canaccord Genuity has a Buy rating and raised its target to $155 from $115.
• Eight Capital raised its price target from $120 to $160.
• Monness Crespi & Hardt has a Buy rating and raised its target to $150 from $125.
• Morgan Stanley raised its target price from $120 to $140.
• Raymond James raised its price target to $155 from $120.
• RBC has a Sector Perform rating raised its target to $120 from $103.
• Wedbush raised its price target to $155 from $140.

Shares of Shopify were last seen at $137.53, with a consensus analyst price target of $133.04 and a 52-week trading range of $58.63 to $140.75.