Shopify withdraws FY20 guidance, citing Covid-19 uncertainty
Cloud-based commerce platform Shopify (SHOP) is suspending financial guidance, in light of the uncertainty related to Covid-19. However, Shopify did note that it anticipates Q1 revenue and adj. op. income in line or above guidance provided on February 12, thanks to strong sales momentum through January and February.
“Shopify’s withdrawal of FY20 guidance suggests that near-term visibility is low, similar to other Internet stocks in our coverage” comments RBC Capital analyst Mark Mahaney.
Nonetheless, he has retained his buy rating on the stock. “Long-term, however, we believe that Shopify will be a beneficiary as we expect this COVID disruption to lead to a sustained pickup in online shopping activity, with Shopify a major beneficiary” the analyst explains.
As a result the analyst leaves his $650 price target on SHOP unchanged, translating into significant upside potential of almost 70%. Overall, the stock has a more cautious Moderate Buy analyst consensus with a $522 average analyst price target (36% upside potential). (See SHOP stock analysis on TipRanks)
Based on Shopify’s data on trends since March 8, the company is seeing brick-and-mortar businesses shifting to online, merchants are heavily discounting, and sales trends are changing based on evolving needs.
At the same time, “Shopify has terminated the accounts of thousands of merchants charging unfair prices or making false claims about COVID-19, which heads off potential reputational risks for the company” adds Mahaney.
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