Shopify Stock is “online sales you don’t want to miss,” says New Bull

Shopify’s shares have fallen since the e-commerce company reported earnings last month and it’s time to sell the stock, J.P. Morgan analysts argued Tuesday.

Analysts Reginald Smith and Charles Pearce initiated coverage on Shopify with an Overweight rating and a $74 price target.

Shopify rose 0.8% to $63.51 in pre-market trading on Tuesday. Tracking futures contracts

S&P500

decreased by 0.3%.

“We believe Shopify’s product breadth, ease of use and scale are a clear competitive advantage that will continue to drive industry-leading growth,” the analysts wrote in a report titled “Online Selling You Don’t Want to Miss.”

The team detailed several different reasons for optimism.

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First, the e-commerce market is huge and JP Morgan believes Shopify has only captured about 11% of it. “We value every share point
could be worth nearly $600 million in annual revenues,” the company said.

Second, Shopify’s investment in research and development exceeds that of its competitors, which allows it to present offers “that it maintains
company at the forefront.”

Last month, the company reported a surprise loss in its fiscal first quarter and warned that the sale of its logistics business would impact second-quarter revenue growth. Shares are down about 18% since Shopify reported quarterly earnings on May 8, compared with a 4% gain for the S&P 500, presenting an excellent opportunity to buy the stock, J.P. Morgan added.

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Write to Emily Dattilo at [email protected]