Analysts at Pacific Crest raised the 12-month price target on Shopify Inc (NYSE:SHOP) from $40 to $43, as the firm claims SHOP stock is “one of the best ways to invest in e-commerce growth.” And yet, SHOP stock is trading in the red.
In a note to analysts, Pacific Crest analyst Monika Garg wrote, “Shopify continues to add new merchants and is also migrating customers to higher pricing tiers, and the increased pricing appears to have no impact on this trend.”
Shopify recently doubled the price of its Shopify Plus services as well as nearly doubled its advanced tier pricing.
Sure enough, Shopify saw success in its latest earnings report. Revenues soared by 93% to $86.6 million and its per-share loss of 4 cents beat expectations for a loss of 8 cents.
Why SHOP Is Down
Monday’s decline in Shopify shares is not a mystery, however: Shopify shares opened at $42.71 today, which is pretty much right where Pacific Crest expects it to go. Might as well take your profits while you can, right?
The bullishness doesn’t exactly extend much further than Pacific Crest’s estimate. The high watermark for SHOP stock is a mere $46 a share (courtesy of Credit Suisse), while the lower end rests at $35.
What’s more, Pacific Crest is looking for full-year revenues for 2016 and 2017 to come in at approximately $364.6 million and $500.2 million, respectively. That’s less than the consensus for both years.
On the bright side, Shopify recently underwent a secondary offering, which Credit Suisse believes offers “increased flexibility” in funding growth, providing funds for anything from research and development, partner sales, marketing boosting, network infrastructure expansion and potential buyouts.
At the very least, the company believes itself is worth more than anything a potential suitor would pay for it, which would have to be much higher than both its current price and estimates.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
