Shares of Shopify (NYSE:SHOP) jumped 5.5% on Wednesday following positive remarks from Stifel analyst Scott Devitt.
Devitt placed a buy rating on Shopify's stock this morning. He sees the e-commerce platform's share price climbing to $1,200, or roughly 8.5% higher than its closing price today.
Devitt says Shopify's international expansion initiatives, booming enterprise business, and new services should help to fuel its growth. He also highlighted the company's multitrillion-dollar addressable market, which he argues justifies Shopify's premium valuation.
Better still, Devitt expects its market opportunity to grow even larger as more people launch online stores in the coming years, and Shopify releases new products and services to help them scale their businesses. In turn, Devitt sees Shopify as the company best positioned to profit from a coronavirus-induced acceleration in e-commerce growth.
Prior to today, Shopify's stock price had fallen 30% from its highs in February during a widespread sell-off in premium-priced tech stocks. Although its stock still isn't cheap by traditional valuation metrics -- its shares currently trade for about 25 times its projected sales in 2022 -- Devitt is essentially arguing that Shopify is now trading at a price that's reasonable considering its massive long-term growth potential. That's a fair argument, and with the stock rising sharply today, one that many investors appear to be buying into.