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Shopify Analyst: E-Commerce Platform Could Sustain 30% CAGR Through 2030

Shopify Analyst: E-Commerce Platform Could Sustain 30% CAGR Through 2030

Although Shopify Inc (NYSE: SHOP) has an impressive, expansive vision and has exhibited strong execution to date, the stock is already pricing in its bright prospects, according to Morgan Stanley.

The Shopify Analyst: Keith Weiss initiated coverage of Shopify with an Equal-Weight rating and $970 price target.

The Shopify Thesis: The company serves a total addressable market of $78 billion globally, which could enable it to sustain a compounded average growth rate of around 30% through 2030 and hit $25 billion in revenue, Weiss said in the Monday initiation note.

Shopify’s margins are presently below the industry average, the analyst said. 

“We see SHOP growing the merchant base from 1 million today to 4.6 million by 2030 (Subscription Solutions reaching $4.2 billion), while also expanding the take rate and further powering the Merchant Flywheel (GMV reaches $737B, Merchant Solutions grows to $21 billion),” he said. 

“However, with our projection of 22% FCF margins and a $123 billion EV today, investors are already paying 23x our 10-year forward FCF forecast,” Weiss said.

Morgan Stanley recommends looking for a “more attractive entry point, either on a pullback or early indications that estimates have to move meaningfully above our framework.”

SHOP Price Action: Shopify shares were trading 0.8% higher to $1,037.20 at last check Monday. 

Photo courtesy of Shopify. 

Latest Ratings for SHOP

Nov 2020JefferiesUpgradesHoldBuy
Oct 2020Morgan StanleyMaintainsEqual-Weight
Oct 2020Roth CapitalMaintainsNeutral

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