Shares of Shopify (NYSE:SHOP) were trading higher on Thursday, after a key analyst raised his price target for the e-commerce specialist's stock to $1,000 per share.
As of 1:45 p.m. EDT, Shopify's shares were trading at just over $865, up about 5.9% from Wednesday's closing price.
In a new note on Thursday morning, RBC Capital analyst Mark Mahaney raised his price target for Shopify's stock to $1,000, from $825, while maintaining an outperform rating on the shares.
Mahaney noted that Shopify's share price has already doubled year to date, but said that he thinks it has room to run. He feels that investors underestimate the company's total market opportunity, its ability to earn higher fees on the sales generated by merchants using its platform, and its potential to boost its operating margin over time.
Mahaney had another reason to be bullish on Shopify's shares: He feels that the COVID-19 pandemic has "permanently" altered consumer buying patterns, shifting more transactions online in a sustainable way. He believes that shift, together with the company-specific factors outlined above, provide good support for Shopify's high valuation -- and investors apparently agreed on Thursday.
Shopify earlier this week announced a significant partnership deal with Walmart (NYSE:WMT), in which Walmart has agreed to create a new section of its site where merchants using Shopify's platform can list their products. It's a new business model for both companies, one with great potential to drive growth for both partners -- another factor that may have been lifting Shopify's shares this week.