On Wednesday, RBC Capital Markets maintained its Outperform rating on Shopify (NYSE:SHOP) with a steadfast price target of $130.00, positioning it between the analyst range of $78 to $145. RBC Capital's analysis indicates that Shopify's fourth quarter performance is likely healthier than market expectations, driven by Gross Merchandise Volume (GMV) and margin strength. With the company's next earnings report due on February 12th, and a solid gross profit margin of 51%, investors are watching closely. Despite this positive outlook, the firm advised caution due to potential for weaker first quarter guidance.
Shopify's stock price is currently valued at approximately 12 times the next twelve months' enterprise value to sales (NTM EV/S), which is slightly below its three-year pre-pandemic average of 13 times but remains above the valuation of its fast-growing Software (ETR:SOWGn) as a Service (SaaS) industry peers, which stand at 11 times. RBC's $130.00 price target for Shopify is based on a 12 times multiple of the calendar year 2026 estimated EV/S, a premium justified by Shopify's anticipated faster near-term revenue growth of 26% compared to its peers' average of 18%. According to InvestingPro analysis, Shopify is currently trading above its Fair Value, though the company maintains strong financials with a healthy current ratio of 7.1.
The company's significant Total (EPA:TTEF) Addressable Market (TAM) and the potential for sustained strong growth over the long term were also highlighted as reasons for the positive valuation. While RBC Capital expressed a note of caution heading into the fourth quarter results, they also noted that any dip in Shopify's stock price would present a buying opportunity, given the company's strong growth momentum projected to continue through 2025.
Shopify's position above its peers in terms of growth prospects is a key factor in RBC Capital's analysis. With the e-commerce platform's Q4 results anticipated to surpass consensus expectations, investors are watching closely for the official earnings release to gauge the company's performance and future outlook.
In other recent news, Shopify's revenue figures have been turning heads among analysts. The company's Black Friday through Cyber Monday sales saw a 24% increase in gross merchandise volume, reaching $11.5 billion. Loop Capital Markets and Deutsche Bank (ETR:DBKGn) have maintained their Buy ratings for Shopify, with price targets of $140.00 and $125.00, respectively. This follows a positive reception of Shopify's artificial intelligence tools such as Magic and Sidekick among merchants and a strong performance during the holiday selling season.
RBC Capital Markets also highlighted Shopify as a top pick for 2025, along with Microsoft (NASDAQ:MSFT) and MongoDB (NASDAQ:MDB). The firm identified Shopify as a driving force behind the expected growth of the S&P/TSX Information Technology sub-sector, with a price target set at $130.00. Shopify's robust growth trajectory has been underscored by a 23.47% revenue increase over the last twelve months.
Raymond (NSE:RYMD) James has maintained a Market Perform rating on Shopify following the company's record-breaking sales during the Black Friday Cyber Monday weekend. Shop Pay, Shopify's payment method, continued to show robust growth, with a 58% year-over-year increase. These are the recent developments for Shopify.
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