Shopify Is Positioned For 'Permanent Structural Industry Change' After Coronavirus: Piper Sandler

Shopify Inc SHOP is among the best-positioned beneficiaries of the potential acceleration in e-commerce due to the coronavirus pandemic, according to Piper Sandler.

The Shopify Analyst: Brent Bracelin upgraded Shopify from Neutral to Overweight and raised the price target from $733 to $843.

The Shopify Thesis: Shopify’s download data for April and May indicates accelerating trends and global digital commerce penetration rates are likely to spike through 2030, Bracelin said in a Monday upgrade note. (See his track record here.)

“While it took a decade for digital commerce adoption to reach 15% in 2020 from 5% in 2010, there are early signals that CV-19 could drive a permanent structural industry change to consumer purchasing behavior in the post CV-19 era,” the analyst said. 

Shopify has a “critical footprint,” since it already provides a retail operating system for more than 1 million merchants globally and is expanding its product offering, he said. 

The company could potentially grow its revenues fourfold to $12 billion by 2025, representing a compounded annual growth rate of 39%, Bracelin said. 

The analyst raised the revenue estimates for fiscal 2020 and 2021 from $2.21 billion to $2.25 billion and from $2.89 billion to $3.14 billion, respectively. He also raised earnings estimates from 35 cents per share to 43 cents per share in 2020 and from 47 cents per share to 57 cents per share in 2021. 

SHOP Price Action: Shares of Shopify were up 6.12% at $787.91 at the time of publication Monday.

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Photo courtesy of Shopify.