Shopify’s business fundamentals are improving despite the recent drop in the stock price of the provider of e-commerce cloud services and tools, according to Baird.
Shopify stock (ticker: SHOP) has risen nearly 117% year to date as investors became more optimistic about its e-commerce infrastructure platform, services, and tools. But the shares are down about 5% since it last reported earnings on Aug. 1 amid a general pullback of high-growth technology stocks.
On Wednesday, Baird analyst Colin Sebastian reaffirmed his Outperform rating for Shopify stock, pointing to positive business trends. The company is slated to report third-quarter results on Oct. 29 before the market open.
“We expect Shopify Q3 results slightly above consensus expectations based on continued strong levels of brand and merchant adoption and overall healthy U.S. e-commerce trends,” he wrote. “Fundamental trends still appear healthy.”
Shopify stock is up 0.5% to $301.12 in Wednesday afternoon trading.
Sebastian wrote that his industry checks show the company is acquiring new customers at a rate faster than he expected. He reaffirmed his $410 price target for Shopify’s stock.
Other Wall Street analysts are mixed on Shopify. About 53% have ratings of Buy or the equivalent on the stock, while 37% have Hold ratings, according to FactSet. Their average price target for the stock is $368.36.
Last month, the company announced an agreement to acquire 6 River Systems, a provider of warehouse fulfillment solutions and automation robots, for about $450 million. Two founders of 6 River were previously executives at Kiva Systems, which was acquired by Amazon.com (AMZN).
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