Globe says Shopify kept at "neutral/high risk" 2022-02-18 08:54 ET - In the News
The Globe and Mail reports in its Friday, Feb. 18, edition that Citi analyst Tyler Radke has reaffirmed his "neutral/high risk" recommendation for Shopify. The Globe's David Leeder writes in the Eye On Equities column that Mr. Radke cut his share target to $882 (U.S.) from $978 (U.S.). On Wednesday Shopify released disappointing fourth quarter financial results as revenue growth continues to slow. Mr. Radke says in a note: "In a tougher e-commerce environment, Q4 results and initial 2022 outlook disappointed. While revenue and GMV [gross merchandise volume] came in above expectations, this was led by lower margin merchant solutions vs. subscription solutions. The initial 2022 outlook implies a significant ramp in investments against a tougher macro environment and slowing revenue growth prospects in FY22. These investments should help buoy merchant additions, particularly in 2H of the year, but this is against a disappointing 2021 merchant count (5 per cent below Street). Furthermore, the revenue mix shift to merchant solutions is expected to weigh on margins. Coupled with a variety of long-term investment areas, without enough topline support, our operating margin estimates move down 300 basis points in FY22."