Shopify is gaining traction in the enterprise market — selling e-commerce software and services to big companies, said an analyst who upgraded the stock to outperform on Monday. Shopify stock climbed, continuing a strong rebound in 2023.
Michael Morton, analyst at SVB MoffettNathanson, upgraded shares on upside from premium-priced Shopify Plus services. Though the e-commerce firm brings in most of its revenue from small and medium-size businesses, it also targets big companies with its Shopify Plus services.
"While Wall Street was distracted by the pitfalls of Shopify's fulfillment network, the company deployed a series of product improvements making Shopify Plus a more attractive e-commerce solution to the enterprise," Morton said in a note to clients. "These product developments were not unnoticed by the enterprise market, or the system integrators."
Canada-based Shopify completed the sale of its fulfillment unit in early June, which eased investor angst over rising investments for Shopify stock.
Meanwhile, Shopify stock rose 0.9% to close at 66.17 on the stock market today, and shares are up 88% this year as of Friday's market close.
Shopify Stock: Fulfillment Sale Lifts Shares
Further, most of the Shopify stock gain has come since May 4. At that time, the company announced the sale of the fulfillment business to privately held Flexport. Also, SHOP stock sold off in 2022 amid worries over growing investments and management turnover.
"Web traffic to the Shopify Plus login portal is outpacing traffic to incumbent enterprise solutions," added Morton. "Shopify Plus gross merchandise volume is accelerating and gaining share."
In May, Shopify launched a program called Commerce Components. The program enables businesses to integrate Shopify's checkout and back-office services with their existing online platforms.
According to IBD Stock Check-up, Shopify stock holds a Relative Strength Rating of 96 out of a best-possible 99.
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