Shopify's Shares Rally After Needham Initiates Coverage With a Buy Rating and a $135 Price Target

Shopify shares rose 4.14% on Monday after Needham & Company initiated coverage with a Buy rating and a $135 price target. The firm highlighted Shopify's long-term growth potential, investments in international markets, and B2B commerce as key drivers of its next growth phase. Needham also noted Shopify's strong operating leverage and free cash flow expansion as factors supporting its bullish view.

Shopify Inc. (NASDAQ: SHOP) saw its shares rise by 4.14% on Monday following Needham & Company's initiation of coverage with a "Buy" rating and a price target of $135. The analysts highlighted several key factors contributing to their optimistic outlook, including Shopify's robust growth, strong cash flow profile, and strategic positioning in the e-commerce and AI sectors.

Needham analysts noted that Shopify's revenue grew by 27% year-over-year in the first quarter of 2025, reaching $2.36 billion, driven by a significant increase in gross merchandise value (GMV) and strong performance in international markets [1]. The company's management expects a free cash flow margin to stay in the mid-teens for the second quarter, further bolstering its financial health. Additionally, Shopify is expected to benefit from AI and enterprise tailwinds, with the introduction of new AI tools such as "Sidekick" [1].

The investment thesis underscores Shopify's ability to capitalize on the growing demand for e-commerce solutions and AI-driven technologies. The analysts believe that Shopify's strategic positioning in the market, coupled with its robust financial health, makes it an attractive investment opportunity. The stock has been trading at around $112.11, but analysts predict that higher sales projections could push the value of SHOP stock up by 21.9% to $136.66 [3]. This optimism is driven by Shopify's strong free cash flow margins and its ability to compete effectively with major players like Amazon.com (AMZN).

Investors should consider the potential risks, such as geopolitical tensions and competitive pressures, but the overall outlook remains positive. Shopify's focus on innovation and its strong market position make it a compelling choice for long-term investors.

References:
[1] https://www.ainvest.com/news/needham-initiates-coverage-shopify-buy-rating-pt-135-2507/
[2] https://seekingalpha.com/news/4467097-shopify-attracts-a-new-bull-rating-as-needham-points-to-durable-growth-opportunity
[3] https://finance.yahoo.com/news/shopify-stock-bargain-3-2-133002023.html