KeyBanc: Pullback In Shopify Shares Creates Buying Opportunity

Since hitting a late-March high, Shopify Inc SHOP shares have shed about 19 percent, and one analyst views the pullback as an opportunity to add to positions in a high-quality franchise.

The Analyst

KeyBanc Capital Markets analyst Monika Garg reiterated that Shopify is one of KeyBanc's top ideas.

The analyst maintained an Overweight rating on Shopify with a $170 price target.

The Thesis

Despite concerns connected to issues surrounding data and Facebook, Inc. Common Stock FB, Shopify drives the majority of the gross merchandise value on its platform organically through its websites, Garg said in a Sunday note.

The next biggest driver for the stock comes from the company's point-of-sale solutions by its merchants, while GMV from marketplaces such as, Inc. AMZNeBay Inc EBAY and social channels such as Facebook, Instagram and Snap Inc SNAP are smaller contributors to Shopify's GMV, according to KeyBanc. 

The majority of merchant acquisition comes from organic channels through the company's websites, Garg said. Apart from its focus on B2C, the Canadian e-commerce company has rolled out functionality for wholesale — or B2B — for Shopify Plus merchants, the analyst said. 

"We believe the B2B market is much bigger than B2C, and Shopify could disrupt the B2B market in a similar fashion." 

KeyBanc projects substantial upside to its above-consensus 2019 estimates.

The Price Action

Notwithstanding the late-March pullback, Shopify shares are up about 82 percent over the past year.

The sahres were up 0.49 percent after the open Monday. 

Related Links:

The Polarizing Story That Is Shopify

5 E-Commerce Stocks To Watch

Photo by Philafrenzy/Wikimedia. 

Posted In: Citron Researche-commerceKeyBanc Capital MarketsMonika GargAnalyst ColorShort SellersPrice TargetReiterationAnalyst Ratings