Shopify will report its fourth-quarter earnings before the open on Wednesday
E-tail name Shopify Inc (NYSE:SHOP) is set to step into the earnings confessional before the open on Wednesday, Feb. 16, where it will report its fourth-quarter results. At least one analyst already slashed its price target ahead of the event, and it was a pretty substantial cut. Specifically, CIBC cut its price objective by more than 45%, moving down to $950 from $1,750. At last check, SHOP is down 0.7% to trade at $848 this afternoon.
Shopify stock has been thwarted by the 20-day moving average on multiple occasions recently, and the trendline still remains well just overhead. Further, after nabbing an all-time high of $1,762.91 on Nov. 19, SHOP shed 48.3% in the next three months and is now flashing a 41.2% year-over-year deficit.
Circling back to analyst sentiment, it looks like the brokerage bunch is split on Shopify stock. Of the 28 covering the equity, 15 call it a "strong buy," one says "buy," 11 rate it a "hold," and another considers the online retail name to be a "sell." Meanwhile, the 12-month consensus price target of $1,467.66 is a staggering 70.7% premium to its current level of trading, which could mean more firms will follow CIBC's lead in the near future.
Meanwhile, options traders have been overwhelmingly bullish. Specifically, short-term options traders have been call-biased, per Shopify stock's Schaeffer's put/call open interest ratio (SOIR) that sits in just the 3rd percentile of its 12-month range.
It's also worth noting the security's Schaeffer's Volatility Scorecard (SVS) sits at 87 out of a possible 100. This implies that SHOP has exceeded options traders' volatility expectations over the past year.
Digging deeper, it looks like these traders are pricing in a 16.7% post-earnings swing for the stock this time around, which is much larger than the 6.2% move Shopify stock has averaged during its past eight next-day sessions, regardless of direction. Looking back, the equity does have a history of mostly positive returns the day after its quarterly reports over the past two years, with returns of 11.4% and 7% in April and October, respectively.