SHOPIFY GETS DOWNGRADE

Shopify Inc. was hit with a downgrade at RBC Capital Markets as a lot of good news appears embedded in the current share price.

The stock has been on a tear of late, climbing 80 per cent so far in 2017, and roughly 200 per cent since its debut in May, 2015.

However, RBC analyst Ross MacMillan lowered his recommendation on Shopify shares to sector perform f rom outperform, while maintaining a price target of US$77 per share.

He noted the Ottawabased provider of e- commerce services to small and medium- sized merchants is now trading at a higher market capitalization than Demandware, Magento, Hybris and Art Technology Group combined when they were taken over.

“Shopify is a very different business, addressing a larger population of merchants with a differentiated business model,” the analyst said. “But we still think the context is important.”

With Shopify set to report its first- quarter results on May 2, MacMillan emphasized the downgrade is not a call on the upcoming earnings, nor is it a reflection of weakening fundamentals.

In fact, RBC’s recent surveys indicate positive demand trends for Shopify, and in turn, higher estimates.

However, MacMillan believes there is a risk that Shopify’s new merchant additions will slow in 2017.