Deutsche Bank lowered its one-year price target on Shopify Inc. (NASDAQ: SHOP) to $175 from $195, while leaving its recommendation at Buy. The bank said the modest reduction reflects updated profitability estimates for fiscal 2026 and 2027 that are largely driven by adjustments to expected tax rates.
Shopify shares were trading at $106.23 at the time of the note, down from a prior close of $127.24 and off 26.25% year-to-date. Deutsche Bank emphasized that the target change does not alter its view of the companys longer-term strategic position, calling out continued momentum in core, long-term growth initiatives.
In its analysis, the bank highlighted Shopifys push into what it terms "Agentic commerce," and said the companys steps in this area support a premium valuation. Deutsche Bank also pointed to the platforms expansion of its total addressable market through broader merchant reach, geographic growth, additional services, and an improving free cash flow profile.
Supporting those remarks, InvestingPro data referenced by analysts shows Shopify trading at a price-to-earnings ratio of 112.36, a level that reflects high growth expectations. The report noted that Shopify still appears undervalued relative to InvestingPros Fair Value assessment, even at that elevated P/E.
Financial performance details cited by the bank include 30.14% revenue growth over the last twelve months and total revenue of $11.56 billion. Deutsche Bank also called out the firms scaling of new customer acquisition tools, notably Campaigns, which it said saw merchant adoption triple and revenue double in 2025.
Despite those positives, Deutsche Bank acknowledged some investor disappointment around a lack of meaningful improvement in free cash flow margins, alongside continued investment spending. The analyst community overall remains constructive on Shopify, with consensus recommendations centering on Buy and price targets ranging from $110 to $220.
Quarterly results and other analyst moves
Shopifys recent quarterly report drew attention across the sell side. The company delivered revenue that exceeded consensus by 2.2% for the fourth quarter, and reported gross merchandise volume growth of 31% year-over-year, which the bank attributed in part to holiday shopping trends.
Several other firms updated their views following the quarter:
- Mizuho upgraded Shopify to Outperform while keeping a $150.00 price target, citing strong execution and momentum in growth areas.
- RBC Capital described the quarter as fundamentally strong but cut its price target to $170.00 from $200.00, pointing to concerns related to free cash flow and taxes.
- Citizens lowered its price target to $160.00 from $200.00 and kept a Market Outperform rating, noting a 29% year-over-year GMV increase for the quarter when excluding foreign exchange effects.
- Cantor Fitzgerald reduced its price target to $126.00 from $181.00 despite acknowledging the better-than-expected fourth-quarter performance.
- Benchmark reiterated a Buy rating with a $145.00 price target and emphasized Shopifys continued investments in its commerce platform.
These actions illustrate a range of analyst views: while most firms remain constructive on the companys growth trajectory and execution, some are trimming valuations on concerns around free cash flow dynamics and tax-related profitability impacts.
Key takeaways
- Deutsche Bank decreased its Shopify price target to $175 from $195 but retained a Buy rating, citing tax-rate-driven adjustments to profitability projections for fiscal 2026 and 2027.
- Shopify continues to show revenue and GMV strength, including 30.14% revenue growth over the last twelve months and a 31% year-over-year increase in GMV for the quarter.
- Analysts remain divided on valuation and cash flow; consensus leans Buy with price targets spanning $110 to $220.
Risks and uncertainties
- Tax-rate changes are explicitly cited as the primary reason for Deutsche Banks adjustments to profitability estimates for 2026 and 2027, creating near-term earnings uncertainty - this affects investor expectations for profitability and valuation.
- Limited improvement in free cash flow margins, alongside ongoing investments, has disappointed some investors and prompted several firms to lower price targets, indicating execution and cash generation are potential pressure points - these concerns have implications for equity valuations within the software and e-commerce sectors.
- Analysts divergent price targets and ratings reflect uncertainty over how to balance Shopifys top-line growth and product momentum against margin and tax pressures, which could lead to continued volatility in the stock - this uncertainty resonates across equity markets that track growth-oriented technology and commerce companies.
For investors and market participants, the sequence of price-target adjustments following Shopifys fourth-quarter report underscores two competing narratives: robust growth in revenue and GMV and accelerating product adoption, set against slower-than-expected margin expansion and tax-related profitability shifts. How the company converts product momentum into sustained free cash flow improvement will likely remain a focal point for analysts and investors going forward.