Credit Suisse Downgrades Shopify To Neutral On 'Lofty' Valuation
Credit Suisse analyst Brad Zelnick last night downgraded Shopify (SHOP) to Neutral from Outperform with a price target of $575, up from $450. The shares closed Wednesday up 8%, or $38.50, to $531.25.
The analyst says that despite another strong quarter from Shopify, his positive fundamental view on the company's long-term opportunity, and belief in management's strategy and ability to execute, he's downgrading the shares on its "lofty valuation and embedded expectations."
While the Shopify Fulfillment Network could drive revenue and gross profit upside in years to come, these offerings remain nascent and could take longer than expected to generate meaningful revenue, Zelnick tells investors in a research note.
Following the 286% share price appreciation since the beginning of 2019, the analyst sees a more balanced risk/reward profile for Shopify.
Disclosure: None.