Shopify stock popped Tuesday on an upgrade to buy from Bank of America on views the e-commerce firm's profitability has inflected under a new chief financial officer.
"Following years of declining margin, we believe that the company has turned a corner on balanced growth and margin, under new CFO Jeff Hoffmeister," BofA analyst Brad Sills said in a report.
He added: "Revenue growth and disciplined spending point to healthy margin expansion going forward. We forecast 17.4% operating margin for fiscal 2026, up from 14.3% in 2024."
On the stock market today, Shopify stock popped 8.6% to close at 69.72. As of Monday's market close, Shopify stock had retreated 12% in 2024.
Shopify Stock: Earnings Due In August
Shopify sets up e-commerce websites for small businesses, and partners with others to handle digital payments and shipping.
"We expect upside to Q2 revenue growth of 23%," Sills said. "Shopify appears well positioned to continue capturing share of the e-commerce market, while achieving better scale and free cash flow conversion." Also, earnings for Shopify stock are due in early August.
Meanwhile, SHOP stock holds a Relative Strength Rating of only 24 out of a best-possible 99, according to IBD Stock Checkup.
Further, the company in 2023 sold its delivery and logistics business to Flexport. The move eased Wall Street worries over rising capital spending.
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