J.P. Morgan analyst Reginald Smith has maintained their bullish stance on SHOP stock, giving a Buy rating yesterday.
Reginald Smith has given his Buy rating due to a combination of factors, including Shopify’s robust revenue growth and strong performance in its Merchant Solutions segment. Despite a slight deceleration in growth, the company reported a 27% year-over-year increase in total revenue, surpassing both J.P. Morgan and Street expectations. This growth was primarily driven by a 29% increase in Merchant Solutions, highlighting the company’s strength in payments.
Additionally, while the Free Cash Flow (FCF) margin was on the lower end of guidance, it still met Street estimates, indicating financial stability. The guidance for the next quarter suggests a stable operating expense ratio and continued revenue growth in the mid-20% range. These factors, combined with a steady gross profit growth and a rising attach rate, underpin Smith’s positive outlook on Shopify’s future performance.
In another report released yesterday, ATB Capital Markets also upgraded the stock to a Buy with a C$160.00 price target.
Based on the recent corporate insider activity of 216 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of SHOP in relation to earlier this year.