Proactive Investors - Shopify (TSX:SHOP) Inc (TSX shares took a hit on Wednesday morning after Wedbush analysts lowered its rating to Underperform on the Canadian eCommerce stock.
Analysts came away from Shopify’s Investor Day with a bearish view on the stock, citing “limited room for further multiple expansion.”
“While we continue to hold a favorable view of Shopify's overall strategy and competitive positioning within eCommerce, shares have risen +53% since the company reported 3Q23 results on November 2nd and now trade at a significant premium relative to software peers across key valuation metrics,” Wedbush analysts wrote in a note.
Wedbush analysts were zeroed in on the company's long-term strategy, competitive positioning, and potential growth drivers at Investor Day. Despite increased confidence in Shopify's market share expansion, they found no significant changes to the long-term Total Addressable Market (TAM) and monetization outlook.
Shopify's stock is trading at a premium compared to peers, especially in terms of valuation metrics, Wedbush noted.
The revised target price of $68 reflects concerns about the current valuation.
While the outlook for Shopify remains positive, the analysts recommend exploring other eCommerce opportunities for potential upside, particularly Amazon (NASDAQ:AMZN, Outperform) and MercadoLibre (NASDAQ:MELI, Outperform).
Both US-listed and Canadian-listed shares of Shopify were down 2.7% by midmorning.