Shopify stock: analysts look ahead to holiday push

Article courtesy of Investor's Business Daily here

Shopify stock has clawed back near its all-time high ahead of its September quarter earnings report. While rival (AMZN) wraps up its annual Prime Day shopping event today, Wall Street analysts are looking ahead to Shopify's e-commerce growth in the approaching holiday season.

Shopify (SHOP) stock has neared a new entry point of 1,147.01 from a cup base. Shares in the provider of cloud-based e-commerce software and services had pulled back 27% from its all-time high of 1146.91 set on Sept. 4.

Meanwhile, Shopify stock dropped 2.2% to close at 1,082.12 on the stock market today.

Canada-based Shopify continues to benefit as brick-and-mortar businesses pivot online amid Covid-19 lockdowns. However, some analysts say the customers it gained through recent promotions may be starting to leave as economies rebound. Still, Shopify should get a boost from the upcoming holiday shopping season, analysts say.

In a recent blog, Chief Technology Officer Jean-Michel Lemieux said Shopify has been "stress testing daily" to ensure its network can handle projected traffic during the holiday season.

Shopify reports third-quarter earnings on Oct. 29. The company has not provided its own estimates amid the coronavirus outbreak.

"We see upside to estimates though believe the magnitude of the out-performance vs both sell-side and buy-side expectations will diminish relative to last quarter," Shopify stock analyst Brad Zelnick of Credit Suisse said in a report to clients Wednesday.

Shopify sets up e-commerce websites for small businesses, and partners with others to handle digital payments and shipping. In addition, the e-commerce firm has stepped up business lending amid the coronavirus crisis.

"Shopify has crafted a dominant competitive positioning in the small and mid-sized business space, made tangible progress in better servicing enterprise customers, and with strong management execution and a compelling vision to roll out additional products presents a compelling argument to become the Retail Operating System," Morgan Stanley analyst Keith Weiss said in his recent note to clients.