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Shift Technologies: Gearing up for Further Upside, Says 5-Star Analyst
Stock Analysis & Ideas

Shift Technologies: Gearing up for Further Upside, Says 5-Star Analyst

SPACs (special purpose acquisition companies) have been all the rage in 2020, with several high-profile names – DraftKings and Nikola immediately come to mind – using the “blank check” route to go public.

Shift Technologies (SFT) is one of the latest additions to this list. The online used car platform hit the market in mid-October and made an inauspicious start to life as a publicly traded entity; shares dropped nearly 40% over the first five weeks of trading.

Shift’s case wasn’t helped by recent mixed Q3 earnings. While revenue of $59.91 million showed a 30.6% year-over-year increase and beat the estimates by $0.58 million, the company fared badly on the bottom line. EPS came in at -$0.64, missing the Street’s call by $0.47.

However, the stock got a proper boost last week (up 40%) following an announcement that several company executives and board members had purchased shares on the open market. Among them Co-Founder and Co-CEO George Arison, COO Sean Foy, and CRO Mark McCollum.

Investors are obviously happy with this development as it displays a show of confidence from those in the know.

Even so, putting the insider buying to one side, BTIG analyst Marvin Fong believes the company represents an opportunity in an industry worth $840 billion and ripe for disruption.

“The used car market is the largest retail category in the United States, but online penetration is below that of nearly every other major retail vertical,” the 5-star analyst said.

The analyst continued, “While Shift is the No. 3 pure-play in the space, we believe the infrequency of buying a car and the uniqueness of the product (i.e., every used car is unique) limit network effects, providing room for more winners than in other categories where there is a more pronounced winner-take-most dynamic… Despite its attractive growth profile, shares trade at a significant discount to their peers. We believe this positions shares to outperform as that discount narrows and the category continues to grow.”

Accordingly, Fong rates SFT a Buy along with a $18 price target. Investors could be riding gains of a hefty 91%, should Fong’s thesis play out over the next 12 months. (To watch Fong’s track record, click here)

Fong’s colleagues also forecast plenty of upside; The $15.25 average price target suggests share appreciation of 62%. Overall, the analyst consensus rates the stock a Moderate Buy based on 4 Buys and 1 Sell. (See SFT stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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