Shopify Analyst Tackles 3 Investor Questions In Bullish Initiation

The bull-versus-bear debate on Shopify Inc SHOP focuses on three questions, according to KeyBanc Capital Markets, which took a bullish stance on the company. 

The Analyst

Josh Beck initiated coverage of Shopify with an Overweight rating and $250 price target.

The Thesis

Beck covered the following questions surrounding Shopify in a Sunday initiation note. (See his track record here.) 

◘ Can Canada-based and North America-focused Shopify's international business grow? Under a bull case scenario, the company's investments to tailor its platform to local payments will be successful, Beck said. Non-core international growth will continue outpacing core market growth, as the contribution is likely to double from 2018 levels, which stood at 12 percent of revenue, he said. 

◘ What will occur in payments, lending and shipping penetration? The analyst said Shopify's success in Australia, where payments penetration grew over 60 percent over three years, could serve as a template. Lending volumes  stand at 0.7 percent of gross merchandise volume and could provide an incremental upside opportunity, he said. 

◘ Can Shopify's Plus business sustain its momentum? The momentum in upmarket additions could continue "well beyond" today's 5,300 Plus merchants, Beck said. Shopify will likely continue innovating and drive vertical expansion to better serve the 250,000-plus merchants that are using rival services, he said. 

Price Action

Shopify shares were trading up by 1.72 percent at $225.54 at the time of publication Monday. 

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