Shopify stock price forecast: Morgan Stanley sees a 20% upside

By:
on Apr 19, 2024
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  • Morgan Stanley raised its rating on $SHOP to "overweight" today.
  • Analyst Keith Weiss explained why in a research note on Friday.
  • Shopify stock is currently down over 20% versus its YTD high.

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Shopify Inc (NYSE: SHOP) is in the green at writing after a Morgan Stanley analyst issued a bullish note in its favour.

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Shopify stock could climb to $85

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Keith Weiss upgraded the eCommerce giant this morning to “overweight” and raised his price target to $85 which suggests another 20% upside from here.

The analyst is constructive on Shopify stock because he’s convinced the multinational will grow at a compound annualised rate of over 20% through FY30 as it continues to grow internationally.

Note that the New York listed firm is scheduled to report its quarterly financial results on May 8th. Consensus is for it to earn 8 cents a share versus a loss of 8 cents per share a year ago.

$SHOP is currently down well over 20% versus its year-to-date high.

Why else is he bullish on $SHOP?

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Keith Weiss sees Shopify Inc as more reasonably valued on normalised FCF (free cash flow) basis.

The Morgan Stanley analyst told clients today that commentary indicating modest increase in headcount this year leaves room for operating leverage and FCF growth. His research note also reads:

We update our model to reflect more durable GMV strength and ~160bps/~170bps of better operating margin expansion in FY24/FY25, resulting from stable headcount expansion.

Note that Shopify shares may be attractive from technical perspective as well considering they are trading just above their 200-day moving average and the lower Bollinger Band at writing. $SHOP does not, however, pay a dividend at present.

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