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Shopify's Offering Is 'More Cash For Its Shopping Cart,' Credit Suisse Says

Shopify's Offering Is 'More Cash For Its Shopping Cart,' Credit Suisse Says - Shopify NYSE:SHOP

Shopify Inc’s SHOP recent secondary offering seems to be a positive, since it offers the company “increased flexibility to fund future growth strategies,” Credit Suisse’s Michael Nemeroff said in a report. He resumed coverage of the company with an Outperform rating and a price target of $46.

Analyst Nemeroff mentioned that Shopify could use invest the funds from the recent secondary offering into:

  • R&D for continued product development
  • Boost sales and marketing for partner programs and community engagement as well as increased Shopify Plus headcount
  • Expansion of network infrastructure to support strong subscriber growth
  • Potential M&A in the future to enhance the company’s product roadmap

Why Buy?

Nemeroff recommended investors to buy Shopify’s shares, citing the following reasons:

  1. The company has a leading integrated cloud-based commerce platform for SMBs
  2. The secular growth in ecommerce and “convergence of multiple retail sales channels (digital and brick-and-mortar)”
  3. The company has a very scalable platform, with a large third-party ecosystem
  4. Shopify enjoys significant competitive advantages
  5. The company has “a unique share-based pricing model that scales with its customers' success”
  6. There are international growth opportunities
  7. Recent initiatives, such as social channels, Shipping, Kit CRM and Shopify Capital, currently seem to be in the initial stages of monetization

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Aug 2016Credit SuisseReinstatesOutperform
Aug 2016Bank of AmericaInitiates Coverage onNeutral
Aug 2016CitigroupMaintainsNeutral

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