Truist Securities revised their price target for Shopify (NYSE: SHOP) down to $55 from $65, while maintaining a Hold rating, ahead of the company’s Q2 earnings, scheduled to be released tomorrow.

The analysts noted that based on Truist Card Data, there is potential for more restrained gross merchandise volume (GMV) in the second quarter of 2024 compared to the strong financial performance seen in recent quarters. The analysis estimates a GMV of $65.7 billion for Q2 2024, which is a slight 1% beat over their estimate of $64.9 billion but is close to or slightly below the Street estimate of $65.8 billion.

Additionally, the expected revenue from merchant solutions, non-GAAP operating profit, and cash flow could see more modest gains compared to previous quarters. While the risk/reward profile appears more appealing at 6 times the estimated 2025 sales and 41 times the estimated 2025 free cash flow, the Hold rating is maintained due to concerns about valuation and macroeconomic/consumer spending factors. There are no changes to estimates, but the price target has been reduced to $55 following recent tech volatility and lower sector valuations.