Shopify Gets Target Boost From KeyBanc on Fulfillment Network

Shopify’s  (SHOP) – Get Report Fulfillment Network is “a full-fledged, tightly integrated fulfillment solution,” according to a KeyBanc Capital Markets analyst, who raised his price target on shares of the e-commerce software-and-services provider to $1,250 from $1,150.

Shares of the Ottawa-based company were off 1.1% to $1,054.

Analyst Josh Beck, who has an overweight rating on the stock, said the Shopify Fulfillment Network, which was launched last year, “is a full-fledged, tightly integrated fulfillment solution for Shopify merchants and includes order/inventory management solutions, branding and data controls, and access to scalable, flexible warehousing space to sell across multiple channels.”

“Following our SFN deep dive, we walk away more constructive on Shopify’s opportunity to build a new software ‘brain’ to orchestrate the fulfillment value chain,” Beck said.

Beck noted that a broad array of robotic systems has been developed to automate and optimize fulfillment across of variety of functions, such as picking, moving, and sorting, leveraging both hybrid human/robot and purely robotic operations.

Warehouse-fulfillment automation has attracted significant venture capital and corporate investment, Beck said, “leading to an impressive array of robotic systems that are automating and optimizing the fulfillment across a variety of functions.”

The analyst said that, assuming fulfillment costs represent about 15% of gross market value, he estimated that the fulfillment TAM (total addressable market) “could approach half a trillion dollars of spend in the coming years excluding China.”

Goldman Sachs on Monday initiated coverage of Shopify with an equal-weight rating and a $970 price target.

“We see Shopify continuing to expand and capitalizing on the attractive eCommerce tailwinds,” analyst Keith Weiss wrote, “and highlight a $25B ‘serviceable’ opportunity for the company driven by international expansion, continued Payments penetration, and growth within Shopify Fulfillment Network.”