Shopify (SHOP, $1,020.00) gets rating upgrade at Wedbush, on e-commerce market share potential

Shopify  shares got a rating boost from Wedbush analyst, who cited the company’s potential to  capture a share of the e-commerce market in the short term and over time.

Analyst Ygal Arounian upgraded the e-commerce software-and-services provider’s shares to outperform from neutral. The analysts also raised his price target to $1,300 from $998.

"We continue to see strength in Shopify’s near-term ability to capture share in e-commerce," said analyst Arounian. According to the analyst, “pull-forward in e-commerce trends” would be sustainable over time, driven in large part by ongoing changes to consumer habits.

According to the analyst, the coronavirus pandemic has increased the importance of fulfillment for small to midsized businesses and direct-to-consumer companies - which boosts the relevance of the Shopify Fulfillment Network, which the company launched last year. The analyst expects continued upside to estimates, even before the Shopify Fulfillment Network and Point of Sale contribute in material ways.

“While Shopify has targeted $1 billion in SFN costs through 2023E, this reflects an expected cash-neutral rollout that would also come alongside the expected $1 billion in revenue through 2023E," Arounian said.

The analyst feels  all this as just the “first steps in a much larger opportunity” that could augment Shopify’s position in business-to-business e-commerce as well over time.

Tickeron's analysis shows: 

SHOP is in upward trend: price rose above 50-day moving average on September 29, 2020

SHOP moved above its 50-day Moving Average on September 29, 2020 date and that indicates a change from a downward trend to an upward trend. In 32 of 34 similar past instances, the stock price increased further within the following month. The odds of a continued upward trend are 90%.

Current price $1021.83 crossed the resistance line at $1024.71 and is trading between $1024.71 resistance and $1021.62 support lines. Throughout the month of 08/27/20 - 09/29/20, the price experienced a -3% Downtrend, while the week of 09/22/20 - 09/29/20 shows a +7% Uptrend.

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on September 25, 2020. You may want to consider a long position or call options on SHOP as a result. In 60 of 67 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 90%.

The Moving Average Convergence Divergence (MACD) for SHOP just turned positive on September 25, 2020. Looking at past instances where SHOP's MACD turned positive, the stock continued to rise in 44 of 52 cases over the following month. The odds of a continued upward trend are 85%.

Following a +6.74% 3-day Advance, the price is estimated to grow further. Considering data from situations where SHOP advanced for three days, in 332 of 382 cases, the price rose further within the following month. The odds of a continued upward trend are 87%.

The Aroon Indicator entered an Uptrend today. In 378 of 439 cases where SHOP Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 86%

Bearish Trend Analysis

The Stochastic Indicator has been in the overbought zone for 2 days. Expect a price pull-back in the near future.

The 10-day Moving Average for SHOP crossed bearishly below the 50-day moving average on September 11, 2020. This indicates that the trend has shifted lower and could be considered a sell signal. In 8 of 14 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are 57%.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where Apple declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 63%.

SHOP broke above its upper Bollinger Band on September 29, 2020. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Tickeron has a positive outlook on this ticker and predicts a further increase by more than 4.00% within the next month with a likelihood of 81%. During the last month, the daily ratio of advancing to declining volumes was 1 to 1.29.

The Tickeron Profit vs. Risk Rating rating for this company is 2 (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 69, placing this stock better than average.

The Tickeron Price Growth Rating for this company is 35 (best 1 - 100 worst), indicating steady price growth. SHOP’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron SMR rating for this company is 73 (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Valuation Rating of 96 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: SHOP's P/B Ratio (26.61) is slightly higher than the industry average of (3.21). P/E Ratio (0.00) is within average values for comparable stocks, (35.66). Projected Growth (PEG Ratio) (0.00) is also within normal values, averaging (1.67). Dividend Yield (0.00) settles around the average of (0.08) among similar stocks. SHOP's P/S Ratio (56.01) is very high in comparison to the industry average of (4.60).

The Tickeron PE Growth Rating for this company is 100 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.