04:24 PM EDT, 05/08/2024 (MT Newswires) -- The Toronto Stock Exchange's S&P/TSX Composite Index closed down 31.46 to 22,259,16 on Wednesday, the first drop of the month, ending a five-day winning streak as Shopify ( SHOP ) shares plunged 19% after the e-commerce company issued weaker than expected second-quarter guidance.

At the close of trading, Health Care was the only other decliner, down 0.8%; and Utilities and Financial are both higher, up 1.00% and 0.8% respectively.

For the first time in a while, a single stock had a huge influence on how the day of trading went. National Bank said Shopify ( SHOP ) reported "solid-in-line" Q1 results "that were actually ahead of expectations", but the shares closed down C$19.59 to C$86.16 because of the weak outlook.

The issue, National Bank noted, was Q2 guidance which came in "shy of expectations against a robust valuation" that was approaching 10x Ev/S . This, the bank added, left "little leeway for any blemishes" such as a Q2 outlook calling for high-teens growth and a pickup in opex, for investments, when expectations were calling for low-20s growth and scaling operating leverage.

"Yet," National said, "after a series of management calls and our sifting through the results, we think the selloff is overdone... bottom line if you missed the run last year, here's an opportunity."

National kept an outperform rating and US$100 target on Shopify ( SHOP ).

Meanwhile, Wedbush is lowering its target price to US$68 from $75, reflecting its estimate revisions. It reiterated its neutral rating given near-term margin uncertainty and the company's premium valuation relative to peers. Wedbush noted shares were trading for near 48x its revised 2025E adj. EBITA estimate, a "significant premium to software peers."

It said while Shopify's ( SHOP ) growth trajectory is attractive, it highlights that the majority of Shopify's ( SHOP ) revenues are transaction-based and the business model is structurally lower margin compared to the broader software group.

Elsewhere, on Shopify ( SHOP ) valuation. Trust Securities maintained its Hold rating but reduced its price target from US$85 to US$65 based on lower free cash flow (FCF) estimates as well recent volatility, stock weakness and related multiple contraction across pockets of software. It noted Shopify ( SHOP ) currently trades at 7.7X on EV/FY25E sales, a premium to the 20%+ growth peer group trading at 7.2x. Truist believes the premium is warranted given Shopify's ( SHOP ) "superior growth profile" coupled with improving bottom-line metrics as well as the company's "proven identity as being a dominant, market-shaping software and Fintech disruptor."

West Texas Intermediate (WTI) crude oil closed higher on Wednesday, rising off early losses after the Energy Information Administration reported US oil inventories fell last week. WTI crude oil for June delivery closed uo US$0.61 to settle at US$78.99 per barrel, after earlier touching US$76.89, while July Brent crude, the global benchmark, closed up US$0.42 to US$83.58...

Gold prices edged down mid-afternoon on Wednesday, pushed lower by a stronger dollar and rising treasury yields. Gold for June delivery was last seen down US$7.60 to US$2,316.60 per ounce.

BMO noted it's a very quiet morning on the economic data front. There are no major data releases on deck in Canada.

Scotiabank said there is basically nothing interesting by way of US macro risk this week and in Canada it is all about Friday's jobs and wages report.

Meanwhile, Fed speakers this week won't be as dovish as Chair Jay Powell was, according to a Macquarie strategist.

Thierry Wizman, Global FX & Rates Strategist at Macquarie, said central banks in Europe have made the shift toward easing more convincingly than the Fed in the US because concerns about inflation haven't been as pressing in Europe in 2024. "Indeed," he added, "we continue to see a greater dispersion of opinions at the Fed than at the ECB, something that we've expected to continue following the benign outlook for US inflation offered by Jay Powell last week. We expect that other Fed speakers this week won't be -- on average -- as dovish as Jay Powell was last week."