Shares of Shopify (SHOP) jumped Wednesday after the e-commerce platform for entrepreneurs was initiated buy with a $1,200 price target at Stifel.
Shopify shares at last check moved up 5.9% to $1,110.19. The target indicates 14% potential upside from the stock's Tuesday closing price.
The Ottawa company "is positioned for sustainable growth supported by international expansion, growth in enterprise merchants, and the development of additional products and services supporting increased monetization," said analyst Scott Devitt.
At Stifel's $1,200 price target Shopify would trade at a premium to its peer group. But the investment firm says that target is justified due to the size of the total addressable market ($6.4 trillion) and potentially attractive long-term profit margins.
The firm notes that the pandemic has accelerated the secular shift toward e-commerce and away from legacy software platforms. Shopify's total addressable market for small businesses is estimated at $153 billion
"Since launching in 2006, Shopify has created an ecosystem of products (payment processing, financing, shipping, customer engagement tools, etc.), partners, sales channels, and over 6,000 apps to help Shopify merchants sell online and establish direct relationships with customers," Devitt said.
Cramer spoke with Shopify President Harley Finkelstein recently, and the executive told him:
"Shopify is about a lot more than just selling online. Shopify is a retail operating system that allows merchants to sell both online and offline. The company provides capital, payment services, fulfillment and more to innovative startups."