Is Shopify Stock Going Back to $90? 1 Wall Street Analyst Thinks So.

There's no sugarcoating it. Shopify (SHOP 0.03%) got clobbered after releasing its earnings report on Wednesday.

The e-commerce software superstar posted solid first-quarter results, but its guidance for the second quarter was a bit light of what Wall Street expected, and investors responded by doing what they do to growth stocks that miss expectations. The stock plunged roughly 20%.

However, one Wall Street firm reaffirmed its bullish view on the stock even after the disappointing guidance.

In an analyst note on Wednesday afternoon, Oppenheimer reaffirmed its outperform rating on Shopify and its price target of roughly $90, implying an upside of roughly 45% from Thursday's prices.

The analyst commented that the business' fundamentals remain intact, essentially saying that the sell-off was overdone and happened because the company came up short of elevated investor expectations, even though it beat headline estimates.

With the post-earnings sell-off, Shopify is now down roughly a third from its peak ahead of its fourth-quarter earnings report in February. Back-to-back earnings sell-offs isn't a great look for the fast-growing e-commerce stock, and its valuation comes with high expectations.

Even after Wednesday's decline, Shopify still trades at high price-to-sales ratio around 11, and the company has struggled to deliver consistent profits by generally accepted accounting principles (GAAP).

Shopify dominates its industry -- software for online retailers -- and continues to deliver strong top-line growth, but investors are eager to see that translate into meaningful results on the bottom line. After a steady rebound from its pandemic lows, the stock seems to have exhausted its upside potential without significant profits.

In order for the stock to get back to $90, Shopify will have to deliver on the bottom line.