It could be forgiven, to think that Canadian online retail facilitator Shopify (TSE:SHOP) would not be a great buy right now. After all, Canadians seem to be pulling in their collective wallets and keeping buying to a minimum as tariffs hit the economy like a bus dropped from a building. But not everyone is so sure, and Shopify is drawing interest from all over. Investors seem less certain, though, and despite the recommendations, shares dropped around 3% in Tuesday morning’s trading.
The first win came from BMO Capital Markets, noted a CNBC report. Analyst Thanos Moschopoulos –who has a five-star rating on TipRanks—started coverage on Shopify with an Outperform rating and a price target of $120 per share. That represented a roughly 22% gain over Monday’s close, which might seem unduly optimistic given the nature of Shopify.
But Moschopoulos had reasoning behind his assessment, starting by acknowledging the “near-term risk” that tariffs represented. However, he followed that up with the fact that Shopify provided vital “agility” to merchants, which allowed for a certain amount of tariff-proofing. After all, Shopify proved a pandemic darling when it gave merchants the ability to stay open and operating in a time when going out was limited by federal mandate. And that agility, Moschopoulos noted, would provide a “…competitive differentiator…” that would prove even more relevant now.
That Wasn’t All
If it were only one analyst, it might be brushed aside. But Moschopoulos was not alone on this one, as a report from The Globe & Mail came out with its own recommendation. That report, offered up by Larry MacDonald, who had been following Shopify for some time and released a book called The Shopify Story, told The Globe & Mail that Shopify makes a lot of sense as a buy.
MacDonald pointed out the same thing Moschopolous did: short-term pain from the tariffs, yes, but Shopify also has an excellent track record when it comes to beating analysts. In fact, MacDonald noted, Shopify beat analysts in 34 out of the last 39 quarters. And, even with the short-term pain, there is still the matter of the long-term to consider. The tariffs will likely be settled, someday, one way or another. That will open up the path to victory for Shopify once more.
Is Shopify Stock a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:SHOP stock based on 25 Buys and 14 Holds assigned in the past three months, as indicated by the graphic below. After a 24.5% rally in its share price over the past year, the average SHOP price target of C$166.15 per share implies 26.3% upside potential.
