Shopify Inc. (SHOP) shares fell more than 3% during Monday's session after Roth Capital downgraded the stock from Buy to Neutral. While analyst Darren Aftahi remains positive on underlying business prospects following the Unite conference and investor day, he believes that the stock's valuation may already be pricing in these bullish sentiments.
DA Davidson is much more bullish on Shopify stock. Analyst Tom Forte raised his price target from $290 to $400 per share following the Unite conference and investor day, saying that fulfillment, international expansion, and retail efforts could help generate a high rate of sales growth for years. He maintains a Buy rating on the stock.
Shopify's new fulfillment network enables merchants of all sizes to deliver their products fast and at a low cost. In addition to a network of fulfillment centers, the company is leveraging machine learning to ensure timely deliveries and lower shipping costs. The company also launched a new merchant portal and point-of-sale system.
From a technical standpoint, the stock fell toward the middle of its price channel following an initial move higher. The stock is up nearly 90% following the bullish crossover of its 50- and 200-day moving averages back in February. The relative strength index (RSI) moderated to 64.41, but the moving average convergence divergence (MACD) could see a bearish crossover in the near term.
Traders should watch for an extended move lower toward trendline support at around $297.00 before a move higher. If the stock breaks down from those levels, traders could see a move toward reaction highs of around $285.00. If the stock breaks out from channel resistance, traders could see a move to all-time highs, although a consolidation appears likely at the moment.
The author holds no position in the stock(s) mentioned except through passively managed index funds.