Launched only in 2015, Shoptalk has quickly turned into one of the largest and most important retail conferences in the US. More than 8,000 people attended the conference in Las Vegas this week, as 270 speakers discussed technology, social media and changing consumer behavior, among other topics. Shopify (SHOP) — a fast rising player in e-commerce — was at the event as e-commerce software continues to grow in importance, as it can help even the smallest mom and pop store sell across the country.
RBC analyst Ross MacMillan attended the conference and caught up with Shopify team. The analyst remains optimistic on SHOP stock, reiterating an Outperform rating and $230 price target, which implies nearly 22% upside from current levels.
Shopify Plus is the company’s answer to large online businesses wanting to use their service. The Shopify Plus platform is able to handle more than 10,000 orders per minute with a 99.98% uptime, making sure the even the biggest brands can handle peak demand. MacMillan says, “investments into the Plus platform continue at a rapid pace…focused on configuration/ customization for more sophisticated merchants (such as the Flow workflow management environment) as well as international/ multi-site capabilities.”
Furthermore, the analyst believes “new product developments will include Product Center, a lightweight product information management (PIM) solution for multi-store environments.” MacMillan say, “this, coupled with multi-currency support and multi-site inventory, will strengthen Plus’ position for international and multi-brand deployments,” opening the door to a larger market.
As the product is being more heavily geared to international deployments, Shopify is positioning itself to sell in foreign markets. MacMillan says, “Plus now has sales people on the ground in UK and Australia…[with] more countries [expected] in 2019.” However, the analyst thinks these investments may not even matter, saying that “organic interest in Plus remains high” for Plus, with “inbound inquiries from DVNBs (digital native vertical brands), traditional retail and CPG [outweighing] outbound marketing efforts.”
MacMillan is optimistic on Shopify not only from a “new merchant wins” perspective, but because he continues “to hear of a steady flow of brands moving from other platforms to Shopify Plus.” He says, “notable were examples from the low-end of the Salesforce Commerce Cloud/ Demandware base…and from Magent…[while] there also appears to be a growing effort for CPG companies to execute on their D2C strategies and we heard of some examples where Shopify Plus is becoming the platform of choice.”
As always, we like to give credit where credit is due. According to TipRanks, MacMillan has a yearly average return of 30.5% and an 86% success rate. MacMillan has an average return of 94.1% when recommending Shopify and is ranked #2 out of 5,228 analysts.
Overall, the analyst community is optimistic on Shop stock. TipRanks analysis of 21 analyst ratings on the stock shows a consensus Moderate Buy rating, with 15 analysts recommending Buy and six recommending Hold. However, the average price target among these analysts stands at $191.47, suggesting the stock is neither oversold nor overbought. (Get TipRanks’ free stock analysis report on SHOP)
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