In 2023, enterprise adoption of Shopify Plus is expected to pick up and this will enable Shopify (NYSE: SHOP) to once again outpace overall e-commerce growth in the United States.

That’s the opinion of Deutsche Bank analyst Bhavin Shah, following conversations with industry players, including various agencies and Shopify partners.

Contrary to the conversations Shah has had over the past year, which often focused on slowing down the speed of migrations, several leading brands are now actively looking to migrate or are in the process of migrating from legacy/competing offerings.

As such, the analyst lists several “potential catalysts” that will spur an acceleration of business migrations in 2023. These are: “(1) demand and supply chain standardization allowing merchants to finally put upgrade systems that have been put on hold since the pandemic; (2) launch of commerce components by Shopify that can ease the transition of large and complex e-commerce implementations; (3) a maturing partner network with large IS (system integrators) investing in the Shopify ecosystem; and (4) network effects as Shopify Plus builds a larger referral base of customers and other brands understand the economic benefits of migration.

Given that it gives large retailers access to Shopify’s components and flexible APIs to build tailored experiences, Shah believes the launch of Commerce Components by Shopify should be the “most impactful driver” of adoption. from Shopify Plus. With this choice, Shopify is lowering three major barriers to enterprise-wide adoption – “implementation time, cost, and complexity.” Since businesses can now “move piecemeal” to Shopify over a period of time, following Commerce Components’ announcement, Shah notes that there has been an “increase in migration.”

With Supreme and Mattel launching on Shopify Plus, further catalysts should come from more brands launching using the service; given all the new GMV (gross merchandise volume) these new merchants will bring in, this should help the company “outpace overall US e-commerce growth.”

So, good news for Shopify, but what does this all mean for investors? Shah upgraded his SHOP rating from Hold to Buy and raised the price target from $40 to $50, implying the stock will now offer 13% returns in the coming months. (To see Shah’s track record, click here)

8 other analysts line up next to Shah in the bullish camp and with 13 additional holds and 1 additional sell, the stock boasts a consensus Moderate Buy rating. That said, following gains of 30% year-to-date, the stock’s value is expected to decline about 8% in the coming year. It will be interesting to see if analysts downgrade their ratings or upgrade price targets over the next few months. (See Shopify’s inventory forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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