Shares of Shopify Inc. shot higher Monday, after Deutsche Bank boosted its rating and price target on the e-commerce software company, saying the narrative has flipped to one of customer migration accelerating from slowing.
The upgrade comes just days after a bullish technical pattern appeared in the stock’s chart.
Analyst Bhavin Shah said conversations he’s had with various Shopify
agencies and partners suggest adoption of the company’s Shopify Plus offering for businesses should accelerate in 2023, which should allow the company to outpace growth in the overall U.S. e-commerce market.
“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,” Shah wrote in a note to clients.
Shah upgraded Shopify to buy from hold, and raised his stock-price target to $50 from $40. His new target is 21.5% above the average target of the 45 analysts surveyed by FactSet of $41.14.
The stock jumped 6.8% in midday trading Monday. The stock traded as high as $43.48 intraday, which was above the Dec. 1 close of $43.40, which at the time was the highest close since May 4, 2022.
Investors may get a peak into 2023 migration trends when Shopify reports fourth-quarter results, which are scheduled to be released around Feb. 15, according to FactSet.
Shah’s upgrade follows the appearance on Jan. 18 of a bullish technical pattern known as a “golden cross” in Shopify’s stock chart, for the first time in four years.
A golden cross is when the 50-day moving average (DMA), used on Wall Street as a short-term trend tracker, crosses above the 200-DMA, which is seen as a dividing line between longer-term uptrends and downtrends. Many chart watchers feel the golden cross marks the spot a shorter-term bounce graduates to a longer-term uptrend. Read more about golden cross patterns.
The stock’s last golden cross appeared on Feb. 5, 2019, when it closed at $17.35. It rocketed 408% until a “death cross,” which is when the 50-DMA crosses below the 200-DMA, appeared on Jan. 21, 2022.
Shopify’s stock has run up 45.3% over the past three months, but has still tumbled 51.0% over the past 12 months. In comparison, the S&P 500 index
has gained 7.3% the past three months and slipped 8.5% the past year.