Needham analyst Scott Berg has maintained their bullish stance on SHOP stock, giving a Buy rating yesterday.
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Scott Berg has given his Buy rating due to a combination of factors, primarily driven by Shopify’s impressive third-quarter financial performance. The company experienced a significant year-over-year growth in Gross Merchandise Volume (GMV), marking a 32% increase, which is the highest since the pandemic-affected periods. This growth was largely fueled by strong sales in North America, while Shopify’s expanding international presence also contributed positively as it introduced payment solutions in new markets.
Despite a slight dip in Monthly Recurring Revenue (MRR) growth due to changes in the free trial structure, Berg anticipates a rebound in the fourth quarter as these changes have now been accounted for. Although there was a minor shortfall in the fourth-quarter Free Cash Flow (FCF) margin due to timing issues, such as tax payments, the overall GMV and revenue growth likely surpassed market expectations. These factors collectively underpin Berg’s optimistic outlook and Buy rating on Shopify’s stock.
In another report released yesterday, J.P. Morgan also maintained a Buy rating on the stock with a $180.00 price target.