Loop Capital upgrades SHOP, says investors underappreciate its AI capabilities

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Loop Capital upgrades SHOP, says investors underappreciate its AI capabilities

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could surge thanks to its use of artificial intelligence for merchants, according to Loop Capital. The firm upgraded the e-commerce stock to buy from hold in a Friday note and raised its price target to $140 from $110. Loop’s forecast calls for nearly 23% upside from Thursday’s close. SHOP YTD mountain

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stock. Analyst Anthony Chukumba pointed to a looked-over aspect of

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’s business, which is using artificial intelligence for merchants as well as internally for efforts like customer service and product support. The company employs a suite of products housed in what it calls

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Magic, which was first introduced in 2023. This includes features like automatically generated emails and blog posts. “We believe investors are underappreciating how

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is utilizing AI to not only better serve its merchants (most notably, under the

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Magic umbrella) but also internally (including in customer support, sales, human resources, and even accounting and finance),” Chukumba said. Chukumba added that

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’s use of AI in its merchant tools will allow the company to grow its revenue at a faster pace than its operating expenses “for the foreseeable future.” “We think

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will be able to maintain 20%+ growth over the next several years while its operating expenses increase at a much slower rate, which will result in additional operating and free cash flow margin expansion,” Chukumba said.

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has advanced 46% in 2024. Nearly 30 analysts covering the stock have a buy or strong buy rating on it, according to LSEG. The average price target, however, indicates upside of just 2.3%.

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#Loop #Capital #upgrades #SHOP #investors #underappreciate #capabilities

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