12:40 PM EDT, 10/22/2024 (MT Newswires) -- Shopify ( SHOP ) is faced with higher bar into Q3 after its recent outperformance, Morgan Stanley said in a Tuesday note. Its Q3 results are due on Nov. 12.

The shares have outperformed large cap Software over the trailing three months as investors returned to the Shopify ( SHOP ) story on the back of a solid Q2 performance amid ongoing consumer/eCommerce demand trepidation, the report said.

"Reads on the consumer and the broader e-commerce demand landscape continue to be mixed, once again creating a setup allowing Shopify ( SHOP ) to prove in-tact growth drivers can support a topline durable enough to withstand increasing levels of consumer choppiness," Morgan Stanley said.

The report said Q3 revenue guidance to increase "low-to-mid 20s YoY" came in line/slightly above investor expectations, while GAAP OpEx guidance of 41% to

42% of revenue indicated notable upside to Street estimates, suggesting durability in the Shopify ( SHOP ) model's ability to deliver consistent margin revisions.

While take rate declined in Q2, Morgan Stanley said it continues to see 2025 as "the year of the take rate" as the company is set to ramp its new merchant solutions "more materially."

Morgan Stanley has an overweight rating on Shopify ( SHOP ) with a price target of $85.

Price: 81.55, Change: -1.11, Percent Change: -1.35