Overview
Benchmark has reduced its price objective for Shopify (NASDAQ: SHOP) to $145.00 from $195.00, while leaving its Buy rating in place. The downgrade in target reflects an updated valuation framework rather than a change in the firms view of the business plan, with Benchmark pointing to higher weighted average cost of capital - WACC - assumptions used in its discounted cash flow analysis as the primary driver of the shift.
Valuation snapshot
At the time of Benchmarks note, Shopify was trading at a price-to-earnings ratio of 93.18 and a PEG ratio of 3.07, figures drawn from InvestingPro data and cited by the firm as indicating a rich near-term earnings multiple relative to growth expectations. The new $145.00 target still implies room for upside from the then-current share price of $128.25.
Positioning ahead of earnings
Benchmark reiterated its positive stance on Shopify ahead of the companys fourth-quarter earnings release scheduled for Wednesday, February 11, 2026. The research house highlighted signs that Shopifys Black Friday and Cyber Monday performance could support a fourth-quarter gross merchandise volume - GMV - figure as high as $121.7 billion, a level described as modestly above consensus estimates.
Beyond top-line indicators, Benchmark singled out operational levers that could produce upside to consensus GAAP operating income. The firm expects continued headcount management supported by AI automation and internal tooling to improve operating efficiency, and it flagged free cash flow margin expansion in 2026 as a "potential sleeper catalyst." The note also used the phrase "comfortable upside" when describing expected outperformance versus consensus GAAP operating income estimates.
Analyst landscape
The broader analyst community displays a mix of adjustments and reaffirmations. Analyst targets compiled in InvestingPro data span from $130 to $220, with a consensus recommendation of 1.9, which the data characterizes as a moderate buy. Several firms have recently updated their views:
- MoffettNathanson upgraded Shopify from Neutral to Buy and set a $150.00 target, citing what it described as an attractive entry point after a selloff among software stocks.
- BMO Capital trimmed its target to $150.00 from $190.00 but maintained an Outperform rating, framing the change as a sector-wide de-rating rather than a company-specific issue.
- Citizens kept its Market Outperform rating and a $200.00 target, expressing the belief that Shopify could beat expectations in the fourth quarter due to possible market share gains and favorable economic conditions.
- RBC Capital reiterated an Outperform rating with a $200.00 target, citing continued growth momentum and a strong fourth-quarter performance.
- Scotiabank raised its coverage to Sector Outperform and increased its price target to $200.00, highlighting the potential impact of Agentic Commerce, or A-Commerce, on the retail landscape.
What to watch
Key items for investors include the actual fourth-quarter GMV figure, the degree to which AI-driven tools are reducing headcount-related costs, and the trajectory of free cash flow margins into 2026. Benchmarks note implies that these operational dynamics, together with the updated discount rate, will determine whether the lowered price target fully captures Shopifys near- and medium-term value.
Key points
- Benchmark reduced Shopifys price target to $145.00 from $195.00, citing higher WACC in its DCF model while maintaining a Buy rating.
- InvestingPro data show Shopify trading at a P/E of 93.18 and a PEG of 3.07; analyst targets range from $130 to $220 with a consensus recommendation of 1.9.
- Analysts point to strong Black Friday/Cyber Monday GMV and AI-enabled headcount management as potential drivers of operating income and free cash flow margin expansion in 2026.
Risks and uncertainties
- Valuation sensitivity - The change in Benchmarks target stems from higher WACC assumptions in its discounted cash flow model, underscoring how shifts in discount rates can materially affect equity valuations and investor returns. This primarily impacts equity markets and growth-oriented tech stocks.
- Execution risk on efficiency initiatives - Expected gains from headcount management through AI automation and tooling may not materialize as projected, which would affect operating income and free cash flow outcomes. This risk is relevant to investors focused on profitability and margin expansion.
- Consensus variance - Analyst targets and recommendations vary widely, indicating uncertainty about short-term performance and the magnitude of upside versus downside around the upcoming quarterly report. This variability affects market expectations within the e-commerce and software sectors.