CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We maintain our 12-month target at $75 on EV/sales of 9.7x our 2025 sales estimate, below historical, but above peers due to growth and a greater focus on profitability/FCF. We increase our 2023 EPS to $0.71 from $0.63 and 2024’s to $1.23 from $0.94. We start 2025 EPS at $1.52. SHOP posted Q3 EPS of $0.24 vs. a $0.02 loss and better than the $0.14 EPS consensus. Sales grew a better-than-expected 25% and impressive 30% ex-logistics sale (500-bp headwind). Merchant Solutions rose 24%, driven by +22% GMV growth and Shopify Payments momentum (58% of GMV processed vs. 54% last year), while Subscriptions increased 29% from previous price hikes. Gross margin widened to 52.6% from 48.5%, as SHOP sees greater leverage post sale of its highly-fixed cost logistics unit. We believe the higher revenue growth coupled with lower operating expenses (seen down again by 1%-4% in Q4 vs. Q3) is driving FCF generation (16% margin in Q3 vs. -11% a year ago), which we see improving through 2025, given SHOP’s scalable business model.