Shares of Shopify (NYSE:SHOP) have gained as much as 5% Thursday after getting an upgrade from Wall Street. Jefferies boosted its rating on Shopify from hold to buy while increasing its price target from $1,150 to $1,250.
Analyst Samad Samana has become increasingly confident that the e-commerce technology company can continue growing in the years ahead. Despite conceding that he has missed out on Shopify's "meteoric rise" thus far, Samana remains bullish on the company's prospects and believes there is more upside in store.
Jefferies predicts Shopify can reach $10 billion in annual revenue in 2025 as gross merchandise volume (GMV) marches higher. For context, Shopify has generated $1.95 billion in the first three quarters of 2020, and analysts expect the company to generate $2.85 billion in total revenue this year.
The COVID-19 pandemic has reinforced the secular shift toward e-commerce. Samana expects GMV growth to accelerate in the fourth quarter due to the busy holiday shopping season, all while Shopify strengthens monetization of GMV.
"[W]e see its future prospects being as bright as ever," the analyst wrote in a research note to investors. "While the pandemic is temporary, it has exacerbated structural issues for both online and offline merchants -- the challenge of selling across multiple channels, the difficulty of logistics, the need to access capital, to name a few."
Shopify's e-commerce platform addresses many of these merchant issues, which will attract more and more merchants and drive growth in the merchant solutions segment.