Accelerating vaccination rates and loosening sanitary measures in Canada boosted retail sales in stores in Canada during the summer, and online commerce suffered. (Photo: 123RF)
What to do with the titles of Shopify, Cargojet and Costco? Here are some recommendations from analysts likely to move prices in the near future. Note: the author may have a totally different opinion from that expressed.
Shopify (SHOP, $ 1,828.29): Company faces relative decline in online sales
That was to be expected. Accelerating vaccination rates and loosening sanitary measures in Canada boosted retail sales in stores in Canada during the summer, and online commerce suffered, says Martin Toner, analyst at ATB Capital Markets, a full service broker in Alberta.
Last week, Statistics Canada released retail sales figures for the month of July. And although online sales at 2.9 billion were slightly higher than pre-pandemic figures, they accounted for just 4.8% of total Canadian retail sales, the lowest proportion since February 2020, notes the analyst.
Although this is only the figure for a single month, the analyst sees it as a certain negative aspect for Shopify, like Amazon. Indeed, the world leader in online commerce, after having announced for its 2nd quarter online sales in line with expectations, revised downwards its forecasts for its 3rd quarter. Amazon now predicts that its sales will increase by 10 to 16% this quarter, after increasing at a rate of more than 30% during the pandemic.
Martin Toner expected some normalization in online sales growth once the pandemic is over. But he believes that growth will gradually return to higher levels than before the pandemic. He also believes that adopting e-commerce as the preferred way to shop will prevail in the long run.
The analyst sees a number of factors that will drive Shopify’s growth and make it an industry leader. Among other things, the growth of its direct-to-consumer (DTC) brands, its international growth, as well as the increase in its take rate.
The analyst is maintaining his “outperformance” recommendation and the target price of $ 2,500 that he set following the second quarter results announced on July 28.