Shopify 'One of the Most Compelling Growth Stories' - RBC Capital

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By Sam Boughedda

Analysts and Morgan Stanley and RBC Capital released research notes on Shopify (NYSE:SHOP) Tuesday, with one cutting its price target on the stock and the other labeling it one of the most compelling growth stories.

The Morgan Stanley analyst lowered the firm's price target on Shopify to $40 from $44, maintaining an Equal-Weight rating. The analyst told investors that fulfillment remains top of mind for investors, who now focus on the cost of building out a 1P network.

"Leveraging the work done by Morgan Stanley's Internet team, our analysis finds that building out Fulfillment is likely just the beginning of a multi-billion dollar investment cycle with a difficult path to significant operating profitability," stated the analyst. "Rather than an accretive contributor to Shopify's earnings power, this dynamic more likely represents the growing competition across Amazon (NASDAQ:AMZN) and Shopify offerings as the two platforms' business models increasingly collide."

Elsewhere, an RBC Capital Markets analyst maintained an Outperform rating and $60 price target on Shopify shares.

He told investors that "data from BuiltWith suggests Shopify's merchants are likely to slightly decline Q3, similar to YTD trends."

"Shopify Plus, Pay and POS are showing continued momentum, which help lift MRR and take rate. Data on Buy with Prime shows limited uptake among Shopify's merchants. While share price volatility may persist in the near term, we believe Shopify is one of the most compelling growth stories in our coverage," declared the RBC analyst.