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Why Investors Shouldn’t Ignore This Analyst’s Warning

Why Investors Shouldn’t Ignore This Analyst’s Warning
Written by publisher team

Shopping and e-commerce

Written by Amy Leggett Wolff at The Motley Fool Canada

Shopify (TSX: SHOP) (NYSE: SHOP) continues to be one of the best deals in TSX today. An e-commerce company and platform has become a must-have for Motley Fool investors. However, the recent technological downturn has made many think twice about adding it to their portfolios.

And this is where analysts keep warning investors: This is an opportunity that won’t last. Since stocks have fallen from all-time highs of $2,228, analysts have repeatedly argued that stocks will only go up. This means that today’s share price is a massive bargain.

Let’s take a look at why.

What the analysts say

Shopify’s latest upgrade came from analysts at William Blair. The company upgraded Shopify from a “market-performing” rating to a “superior” rating. It is not the only research report focusing on the topic. Analysts in TD Securities, Rosenblatt Securities and RBC All of them focused on the topic, giving the e-commerce company an “Outstanding” rating.

The recent drop in Shopify has left analysts believing that the company is definitely at a more affordable level. Moreover, the agreed target price remains at around $2,000 per share. Right now, that’s a 38% potential upside.

Profits support claims

While the tech sector as a whole is still down, Shopify stocks don’t really belong in this group. The company has made solid accommodations time and time again, even during the pandemic And Supply chain issues. This comes from using their payment software, fulfillment centers and more to ensure deliveries are made and merchants are able to keep up with demand.

This was seen on Black Friday weekend, when the company smashed past sales. Shopify posted record sales of $6.3 billion, an increase of 23% year over year. That was before the holidays.

This is also on top of the strong third-quarter performance that Shopify investors saw a few months ago as well. Total revenue increased 46% year over year, with subscription solutions revenue increased 37% year over year. Monthly recurring revenue increased 33%, with GMV increasing 35% year over year. Meanwhile, the company continues to actually make a profit – something other e-commerce companies may not be able to claim.

So, what is the drawback?

It seems like the main problem Motley Fool investors have with Shopify stock is that the numbers aren’t as amazing as they used to be. Gone are the days of triple-digit year-over-year growth. But, honestly, that’s a good thing for me.

Shopify is able to show investors that it can continue to meet demand, remain stable, and see continued growth on a consistent basis. Moreover, it comes with more solutions with increasing global demand. Motley Fool investors can now see the company using Shopify Markets for cross-border purchases. It’s a Shopify app now that lets users search for products, not just merchants. And there’s more coming in the pipeline.

When the tech sector begins to stabilize, Motley Fool investors will be incredibly upset if they miss this opportunity. Shopify stock will likely reach the $2000 level in 2022. It will only go up from there.

The post Shopify Stock: Why Investors Shouldn’t Ignore This Analyst’s Warning That First Appeared in The Motley Fool Canada.

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Deceptive contributor Amy Legate-Wolfe owns ROYAL BANK OF CANADA, Shopify and TORONTO-DOMINION BANK. Motley Fool owns and recommends Shopify.

2022

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