Shopify Inc SHOP issued upbeat earnings in October, beating analyst consensus for the quarter.
But, that is not the reason why Oppenheimer Research analyst Ken Wong issued an Outperform rating, with a $45 price target on the stock — it’s because the Ottawa, Canada-based company smashed Black Friday and Cyber Monday (BFCM) predictions.
Shopify also has more headroom than its competitors to increase prices in the coming year.
See Also: Why This Shopify Analyst Says It’s Time To Sell The E-Commerce Stock
The Analyst: Wong, in a note issued to investors Thursday said that sentiment around Shopify continues to trend higher after it reported $7.5 billion in BFCM sales, and the trend is continuing into December with Shopify’s total traffic thus far in the fourth-quarter outperforming its peers.
“Our industry checks, recent Paypal commentary, and feedback from the company suggest BFCM momentum extended through early December,” the Oppenheimer analyst said. “SHOP management cautioned against extrapolating the strong BFCM trends across the quarter, but we still expect the results position for [Gross Merchandise Value] GMV to exceed consensus expectations.”
Check out other analyst stock ratings.
The Takeaways: In the event of a recession, Wong does not see Shopify increasing its prices, relative to its peers which already have. This could be seen as a catalyst for the stock, as macro improves around the company regarding the $150 million saved from recent layoffs finding its way back to the company’s balance sheet.
SHOP Price Action: Shares of Shopify were trading 1.09% higher to $38.89 late Thursday morning, according to data from Benzinga Pro.
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