Shopify stock surges after RBC lifts target to new Street high of $1,000
Shares of Shopify Inc. are up more than 5% in Thursday trading after RBC Capital Markets analyst Mark Mahaney turned more bullish on the stock, boosting his price target to $1,000 from $825. The new target is the highest listed on FactSet. Mahaney said that the market still undervalues Shopify's potential even as its shares have more than doubled on the year. "In our view, consumer buying patterns have changed permanently," he wrote, "effectively pulling forward" some elements of his financial model. Mahaney also sees upside potential for the company's take rate, or the portion that the company retains of sales made on its platform. Shopify's "effective take rate" was 2.9% in 2019, Mahaney said, and while the company doesn't operate under a marketplace model, it has ample room to bring its take rate closer to what's seen from other services. "In our view, Amazon's MCF (Multi-Channel Fulfilment) is the most comparable service to [Shopify Fulfillment Network], and we believe MCF's 5-15% take rate provides a reasonable long-term bogey," he wrote. Mahaney has an outperform rating on the stock, which has surged nearly 160% over the past three months as the S&P 500 has rallied 30%.
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