Shopify Inc (TSX:SH., NYSE:SHOP) shares are now a Buy in the eyes of Bank of America thanks to balanced growth, margin expansion, and strong future revenue and free cash flow projections under new CFO Jeff Hoffmeister.
The bank forecasts a robust compound annual growth rate (CAGR) of 22% over the next six years, driven by solid eCommerce growth and market share gains.
Analysts also noted Shopify's gross merchandise volume (GMV) consistently outpacing the overall eCommerce market, indicating strong competitive positioning.
Shopify is expected to see significant margin improvements, ranging from 120 to 260 basis points annually, due to disciplined operational expenditure and strategic product mix adjustments.
BoA also anticipates strong FCF growth, projecting $29.4 billion in revenue and $8 billion in FCF by FY30 in an upside scenario.
"Shopify is maintaining a disciplined, limited headcount growth trajectory as a core tenet for operating leverage," BoA wrote.
The new price objective of $82 implies a 28% return potential. Shares of Shopify were up 8.5% at $69.64 by Tuesday afternoon in New York.