Shopify Stock (SHOP) Upgraded to Buy on Valuation – Bargain or Trap?

Shopify's stock (NYSE:SHOP)  surged 7.15% to close out yesterday, with Phillip Securities boosting sentiment today, in upgrading the e-commerce platform provider to Buy from Neutral, citing attractive valuation following a sharp year-to-date decline.

The firm raised its price target to $160 from $155, joining a growing chorus of analysts turning more constructive on the stock after its recent selloff.

The upgrade comes as Shopify has retreated 22.62% year-to-date, creating what Phillip Securities views as a compelling entry point for investors. The analyst highlighted the company's continued strong growth trajectory and strategic positioning to capture emerging opportunities in agentic commerce, a sector focused on AI-driven autonomous purchasing agents that could reshape online retail. 

Phillip Securities is not alone in reassessing Shopify's prospects at current levels. TD Cowen recently upgraded the stock to Buy from Hold with a $159 price target, pointing to the 30% year-to-date decline as creating compelling value despite the company's strong quarterly performance and sustained growth momentum. Mizuho similarly elevated its rating to Outperform from Neutral, maintaining a $150 target and expressing confidence in Shopify's execution capabilities.

The wave of upgrades follows Shopify's solid fourth-quarter results, which showcased impressive operational metrics even as markets remained cautious on valuation. The company delivered 29% year-over-year growth in gross merchandise volume, demonstrating robust demand for its platform.

A GAAP operating margin of 17.2% underscored improving profitability, while international expansion gained traction with nearly half of incremental GMV originating outside North America. These results prompted Citizens to maintain its Market Outperform rating, though the firm lowered its price target to $160 from $200, reflecting a more conservative near-term outlook.

Not all analysts share the same enthusiasm at current levels. UBS raised its price target to $165 from $145 but maintained a Neutral rating, suggesting the stock's valuation may already reflect much of its growth potential. This cautious stance highlights the ongoing debate among market participants about whether Shopify's premium multiple remains justified given broader macroeconomic headwinds and competition in the e-commerce infrastructure space.

Strategic initiatives are bolstering the bull case for Shopify. The company's recent partnership with OpenAI to integrate an Instant Checkout feature within ChatGPT has drawn positive analyst commentary. This collaboration enables merchants to sell products directly through AI-driven interactions, potentially opening new revenue streams without significant capital expenditure. Analysts view this as a capital-efficient approach to monetizing artificial intelligence integration while enhancing free cash flow generation.

Price Targets

The stock's recent volatility reflects markets weighing Shopify's undeniable growth credentials against valuation concerns and macroeconomic uncertainty. With multiple analysts now viewing the pullback as overdone, the upgrades suggest growing conviction that current levels offer an attractive risk-reward profile for investors willing to look past near-term noise toward the company's long-term positioning in AI-enabled commerce.