Deutsche Bank analyst Bhavin Shah upgraded Shopify to a "buy" rating and raised its U.S. price target from $40 to $50 a share, saying more businesses may turn to the e-commerce platform company in 2023 as they upgrade their software solutions.
"Our conversations with industry constituents, including various Shopify agencies and partners, suggest enterprise adoption of Shopify Plus should accelerate in 2023, which should enable Shopify to once again outpace overall US e-commerce growth," Shah wrote.
"Many leading brands are now actively looking to migrate or are in the process of migrating over from legacy/competing solutions and we note this is in sharp contrast to our conversations over the last 12 months which consistently highlighted the pace of migrations slowing."
Shares of Shopify closed on Monday at US$44.05 a share on the New York Stock Exchange, an increase of nearly 9 per cent.
Shopify's stock has been under pressure amid a broader tech rout and concerns about falling consumer demand. Shares of the e-commerce platform company are down approximately 75 per cent from the high reached in November 2021. Last summer, the company announced it would lay off 10 per cent of its staff, with chief executive Tobi Lütke saying at the time that the company erred in betting the share of people making online purchases in retail would permanently jump ahead by five or 10 years.
Shah is not the only analyst who has been recently bullish on Shopify's prospects for 2023. CIBC Capital Markets analyst Todd Coupland lists the company as a top stock pick for 2023, saying Shopify is "positioned to benefit in Q4/22E from strong Black Friday Cyber Monday trends and may also see a potential return to formal financial guidance."
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.