On Tuesday, Morgan Stanley (NYSE:MS) reaffirmed its confidence in Shopify (NYSE: SHOP), maintaining an Overweight rating and a steady price target of $126.00. The stock, currently trading near $111, has shown remarkable strength with a 53% return over the past year and is approaching its 52-week high of $116.35.
According to InvestingPro data, 26 analysts have recently revised their earnings estimates upward, suggesting growing optimism about the company's prospects. The e-commerce platform reported a robust Black Friday/Cyber Monday (BFCM) performance, with sales reaching $11.5 billion, marking a 24% increase from the previous year's $9.3 billion.
This growth aligns with Shopify's strong financial performance, as InvestingPro analysis shows the company maintaining a healthy 51% gross profit margin and achieving revenue growth of 23.5% over the last twelve months. Get access to over 20 additional exclusive ProTips and comprehensive financial metrics with InvestingPro.
Although Shopify did not release separate figures for Black Friday, estimates based on social media suggest the platform saw around $5 billion in sales that day, up 22% from the $4.1 billion recorded in 2023. This suggests that Shopify's fourth-quarter Gross Merchandise Volume (GMV) could grow by 22% year-over-year, which is slightly below Morgan Stanley's estimate of around 23% and investor expectations in the mid-20s percent range.
Shopify's shares experienced a modest decline of approximately 2% on December 2, which may indicate that the market had anticipated stronger Black Friday results. However, the combined BFCM sales figures provide a more optimistic outlook for the quarter's total GMV. If the $11.5 billion in BFCM sales is in line with the average percentage of total reported Q4 GMV from 2021 to 2023, which is 12.1%, Shopify's Q4 GMV could see a 26% year-over-year increase, surpassing both Morgan Stanley's and consensus estimates of approximately 23-24%.
The analyst also noted that the increase in promotions by various brands during the BFCM weekend, in response to a shorter holiday season, might have contributed to the strong sales figures by pulling forward consumer demand.
However, this is balanced by broader e-commerce trends that show an acceleration in retail and non-store sales in October, suggesting a healthy consumer spending appetite that could continue through the fourth quarter. With an excellent InvestingPro Financial Health Score of 3.33 and strong liquidity position (current ratio of 7.1), Shopify appears well-positioned to capitalize on these trends, though current RSI readings suggest the stock may be in overbought territory.
In other recent news, Shopify Inc (NYSE:SHOP). reported strong fourth-quarter Gross Merchandise Volume (GMV) performance, aligning with market expectations. The company's Black Friday Cyber Monday (BFCM) sales growth accelerated to 24%, reaching $11.5 billion. This figure is slightly below the anticipated 25% growth but is in line with the consensus for the fourth quarter GMV. RBC Capital and Oppenheimer have maintained their Outperform ratings on Shopify, reflecting confidence in the company's ability to meet market expectations.
Deutsche Bank (ETR:DBKGn) also reaffirmed a Buy rating, expressing confidence in Shopify's fourth-quarter GMV expectations. However, Piper Sandler maintained a Neutral rating, focusing on the impact of Shopify's partnership with PayPal (NASDAQ:PYPL), estimating a low single-digit impact on Shopify's growth due to this partnership. Truist Securities, Loop Capital, and Scotiabank (TSX:BNS) all raised their price targets for Shopify, reflecting their recognition of the company's strong performance and potential for further growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.