TLDR
- Shopify shares hit a new 52-week high at $159.06 on Friday, rising 4.7% in Toronto trading
- The stock has returned 93.63% over the past year with revenue growth of 29%
- TD Cowen resumed coverage with a hold rating and raised its price target from $130 to $156
- European markets showed exceptional performance with 42% GMV growth in Q2
- OpenAI partnership positions Shopify to benefit from AI-driven commerce trends
Shopify shares climbed on Friday morning, reaching a new 52-week high of $159.06. The stock traded 4.6% higher in New York at $158.17 and 4.7% higher in Toronto at C$221.07.
TD Cowen analyst Daniel Chan resumed coverage of the e-commerce platform with a hold rating. He raised the firm’s price target to $156 from a previous $130.
The company now has a market capitalization of $204.5 billion. Analyst price targets currently range from $118 to $200 across various firms.
Over the past year, Shopify has delivered a return of 93.63% to shareholders. The company posted revenue growth of 29% and earned a “GREAT” financial health score from InvestingPro’s analysis.
The stock currently trades at a P/E ratio of 84.14. This valuation reflects investor expectations for continued growth.
Chan highlighted Shopify’s execution across European markets as exceptional. Gross merchandise volume in Europe grew 42% in the second quarter.
European Expansion Drives Growth
The analyst believes this momentum will continue into the midterm. Shopify’s presence remains early in these international markets, leaving room for expansion.
“We expect this momentum to persist into the midterm as Shopify’s presence is early in these markets,” Chan stated in his report. The European performance implies market share gains for the platform.
Rothschild Redburn maintains a Buy rating with a $200 price target. Citizens JMP holds a Market Outperform rating at $185.
Oppenheimer keeps an Outperform rating with a $180 target. Cantor Fitzgerald maintains a Neutral rating at $156.
The recent partnership with OpenAI introduces a new sales channel. Over 1 million Shopify merchants will be integrated into ChatGPT’s “Instant Checkout” feature.
AI Integration Strengthens Market Position
Chan believes Shopify’s market leadership positions it well for AI-driven commerce. The platform-agnostic approach to AI should help maintain its competitive edge.
“It is Shopify’s market leadership and platform-agnostic approach to AI that we believe will allow it to adapt and maintain leadership should consumers change buying behavior,” the analyst explained. The OpenAI partnership provides retailers with new ways to reach consumers.
Oppenheimer noted that second-quarter momentum was not dependent on macroeconomic factors. This suggests the company’s growth stems from operational execution rather than market conditions.
However, Chan pointed out that macroeconomic risks remain in the background. Despite what he calls an enviable market and financial position, these concerns temper the outlook.
Investors have priced in expectations of 25% revenue growth by 2033. Free cash flow margin projections reach 26% for the same period.
Chan believes the market is assuming Shopify can grow at the top end of its peer group rate. Even achieving this financial performance would only imply fair valuation at current prices.
The company’s international expansion continues to show promise. European markets represent a key growth driver for the platform.
Shopify’s strategic initiatives include the expansion of cross-border transaction volumes. Cantor Fitzgerald’s analysis focuses on this aspect of the business.
The partnership with OpenAI represents the latest in a series of strategic moves. This collaboration is exclusive to Etsy and Shopify merchants on the ChatGPT platform.
