On Monday, Oppenheimer maintained its Outperform rating on Shopify (TSX:SHOP) shares (NYSE: NYSE:SHOP) with a steady price target of $90.00. The firm highlighted potential risks to the consensus revenue forecasts for the fiscal years 2024 and 2025. The analysis was prompted by the lack of a fiscal year 2024 guidance from Shopify and the recent divestiture of its Shopify Fulfillment Network (SFN).
The firm conducted a cohort analysis for Shopify, considering four different scenarios for revenue growth in fiscal years 2024 and 2025. These scenarios range from a "baseline old normal" case to an "optimistic" outlook. According to the conservative baseline scenario, there could be a risk to the current consensus revenue estimates of $8.56 billion for FY24 and $10.27 billion for FY25.
This risk is based on the assumption that Shopify's cohort behavior might revert to pre-pandemic expansion rates, and the addition of new cohorts could slow down from fiscal year 2023's figures, which were approximately $411 million, not including logistics.
In a more positive light, the optimistic scenario takes into account the fluctuating trends of cohorts from fiscal years 2020 to 2023. Under this scenario, Shopify's revenue has the potential to increase by 24% and 23% for fiscal years 2024 and 2025, respectively. These figures are slightly above the Street's expectations of 21% and 20% growth for the same periods.
The analysis by Oppenheimer suggests that while there are risks to the consensus revenue estimates for Shopify, there are also areas of potential growth. The growth of Shopify's cohorts is considered a critical factor, but the firm also notes that newer solutions offered by Shopify could provide additional revenue streams and represent an upside to the current forecasts.
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