Analyst Michael Nemeroff mfrom Credit Suisse has awarded Shopify (NYSE:SHOP), which made its Wall Street debut last May 21, with an "outperform" recommendation, setting a target price of US$40 per share.
The Ottawa company’s cloud based platform enables users, companies or individuals, to create their own online business. Nemeroff suggests that the rapid development of online business creates an excellent opportunity for Shopify to grab market share and attract future customers.
Shopify has "pioneered the pre-eminent cloud-based commerce platform for small and medium-size businesses" and is well-positioned to generate annual revenue growth near 35% over the next few years,” said Nemeroff.
In Q1, Shopify reported revenue of $37.3 million, up 98% from the year-earlier quarter, and a net loss of $4.5 million. The company claims to have helped over 160,000 businesses in about 150 countries, employing some 600 people and produced $8 billion in total sales.
The analyst says Shopify has what it takes to significantly increase its revenues in a market that Credit Suisse says will be growing quickly over the next few years.
For its IPO, Shopify issued 7.7 million shares at a unit price of $ 17 (the initial range was expected at US$14-16 dollars) allowed Shopify to raise US$131 million on the basis of a valuation of US$1.27 billion. The company is now trading at US$34.11.
Shopify’s successful IPO last Thursday has acted as a stimulus for the entire Canadian technology sector, including Montreal's LightSpeed, a rapidly expanding private e-commerce company, which may also consider the IPO path soon.