Shopify stock has been on a tear this year, gaining more than 120% in a move that has pushed its valuation above those of its peers. That lofty price tag may work against the shares heading into the new year, says JMP Securities.
Analyst Andrew Boone downgraded the stock to Market Perform from Outperform on Monday, removing his target for the stock price. At the heart of his call, he said, is the fact that Shopify’s valuation leaves little room for error as the company is undergoing several strategic shifts.
The stock has gained 122% this year. The shares now trade hands at 74.1 times forward earnings, according to FactSet.
“We think execution must be perfect from here, while our estimates versus consensus are mixed looking to 2024 and 2025,” Boone wrote in a note to clients Monday.
In late November, Piper Sandler also downgraded the stock, citing an “untenable valuation.”