Shopify (TSX:SHOP) keeps doing it again and again. Shares of Shopify stock hit 52-week highs this week once again as analyst ratings flood in for the stock ahead of earnings next week. The tech stock was up a whopping 14% in just the last few days.
Shopify stock is set to report earnings on Feb. 13. So, let’s look at what analysts are anticipating and whether investors should get in now or wait until after earnings are released.
“Outperform”
Shopify stock has had several analysts upgrade the potential share price for the company again and again over the last two weeks. Most recently, this included one analyst upgrading the stock’s price target to US$100 from US$82. The average remains around US$76.66 but has steadily climbed over the last two weeks as the recommendations come in.
Last week, another analyst upgraded the stock’s price to US$100, mainly regarding how they expect Shopify stock to perform in the short term. The new growth segments of enterprise companies, point of sale and business to business in particular should increase operating leverage specifically. And if that happens, the company’s higher value will look a bit more solid.
That being said, analysts aren’t predicting that we’ll see the same kind of results we saw back in 2023. Shopify stock had fallen so drastically low that a climb upward after cuts made it an easy win. However, there should continue to be growth, and that is likely to start in the fourth quarter.
Black Friday incoming
Another analyst, who also upgraded the price target to US$100, said Shopify stock should likely report solid fourth-quarter results. In particular, Black Friday weekend will be a huge win for the company. Merchant sales were 22% higher than the year before, with the company bringing in $4.1 billion in sales on Black Friday alone. Over the weekend, it hit a record high of US$9.3 billion in sales.
But it’s not just one great weekend that investors can look forward to. Shopify stock will also likely see an uptake in its Shopify Pay, Shopify Plus, and point-of-sale systems. Furthermore, there has been healthy consumption during the last quarter both in Canada and the United States. All this should help the company see a boost as well.
Therefore, Shopify stock is likely to continue to keep its premium status in the near term. Moreover, its fourth-quarter margins could offer up some upside surprises.
Buy and hold
Even if we aren’t likely to see the same increase in share price as we saw during 2023, investors will likely want to hold onto Shopify stock for at least the next year. As interest rates go down, consumption is likely to come up. This should lead to an increase in spending that could see growth climb even higher.
And with more focus on its enterprise clients, this will also likely lead to even more growth and sustained growth at that. So sure, Shopify stock is trading at a premium. It looks expensive when you consider its fundamentals today. But those fundamentals seem to be warranted.
Investors should continue to look for signs the company is headed towards profitability. That there are plans in place for continued growth. Furthermore, subscriptions should to continue to climb. Should Shopify tick these boxes, there’s likely to be a huge increase in the share price when earnings come out next week.
