UPDATE: Morgan Stanley Downgrades Shopify (SHOP) to Equalweight Following Recent Gains
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(Updated - September 28, 2016 11:45 AM EDT)
Morgan Stanley downgraded Shopify (NYSE: SHOP) from Overweight to Equalweight with a price target of $47.00 (from $37.00). Analyst Brian Essex said channel works suggests strong Q3 revenue growth, but he thinks strength is priced in. Overall he sees balanced risk-reward.
"We are adjusting our numbers and PT higher to reflect recent channel work. However, while we continue to see a robust opportunity for SHOP ahead, we are downgrading to Equalweight with balanced risk-reward following 70% YTD share price appreciation," said Essex.
Discussing his channel work, the analyst said, "Our poll of Shopify Experts (third parties that provide setup, design, and development services for merchants), along with estimated expert growth, suggests better than expected revenue growth through 3Q16. Management guided to revenue between $93mm and $95mm for 3Q with full year revenue between $361mm and $367mm. The midpoint of guidance implies that revenue growth decelerates to 78% y/y in 3Q from 93% last Q with full year revenue growth at the midpoint of 77% y/y. Barring any substantial deceleration in GMV and take rate, we believe numbers will exceed guidance for 3Q as well as the full year."
Shares of Shopify closed at $43.87 yesterday.
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