Roth Capital Starts Shopify, XO Group, Mitek At Buy

Roth Capital's Darren Aftahi initiated coverage on three Internet and media stocks Thursday afternoon: Shopify Inc (NYSE: SHOP), XO Group Inc (NYSE: XOXO) and Mitek Systems, Inc. (NASDAQ: MITK), each with Buy ratings.

Shopify: $35 Price Target

Aftahi called Shopify "a pure-play on agnostically enabling omni-channel commerce." Amid the company's "healthy growth," he estimated penetration remains below 1 percent.

The Roth analyst highlighted three catalysts for the company and stock:

• a growing shift of e-commerce to social media channels;
• new merchant solutions offerings; and
• monetization of larger enterprises via Shopify Plus.

Related Link: Axiom's Victor Anthony Initiates XO Group With A Buy, $21 Target

XO Group: $20 Price Target

XO is viewed as "a market-leading brand presence in the digital wedding services industry" by Aftahi. He applauded new management which has streamlined the company's business and "focused the company on the 82 percent of its sales (online advertising and transactions) which are growing."

Aftahi also likes XO's transformation of The Knot into what he calls "the 'Uber' for weddings app," something he thinks will be attractive to Millennials.

Mitek: $8 Price Target

Aftahi brought up Mitek's recent new products and said the company is now viewed "as a multi-product, multi-geography growth opportunity in the mobile imaging market."

He highlighted a belief that recent customer wins "seem to be coming at a more rapid pace" and have started demonstrating "the broad use case for its platform and products, making it a compelling growth story for investors looking for exposure to mobile and m-commerce."

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