Last Update 19 Feb 26
Fair value Decreased 24%CMRC: Global Checkout And AI Shopping Protocols Will Drive Future Upside
Analysts have reduced their price target on Commerce.com to $2, down $1 from the prior $3 level. They cite ongoing concerns around decelerating recurring revenue and sales growth, which they say leave the core investment story largely unchanged.
Analyst Commentary
Recent Street research has focused on the cut in price targets to $2 and what it signals about expectations for Commerce.com’s execution and growth profile. Across the notes, the common threads are concern around recurring revenue and sales growth trends, and a view that recent quarterly results do not materially shift the story.
Bearish Takeaways
- Bearish analysts point to the reduced price target of $2 as a sign that they see less support for higher valuation levels given current recurring revenue and sales growth trends.
- Several reports highlight that Commerce.com’s recurring revenue and sales growth are decelerating, which they see as a risk to the company sustaining premium growth multiples.
- Commentary around the upcoming Q4 report suggests these analysts do not expect near term results to reshape the underlying investment thesis, which keeps their caution in place.
- With the rating set at Underweight in one of the reports, the message from bearish analysts is that they prefer other names for exposure to this segment until there is clearer evidence of reaccelerating execution.
What's in the News
- Commerce.com issued earnings guidance for Q1 2026, with total revenue expected between $82.5 million and $83.5 million. (Key Developments)
- For full year 2026, Commerce.com guided to total revenue in a range of $347.5 million to $369.5 million. (Key Developments)
- Commerce.com expanded its partnership with Stripe, giving merchants access to Stripe's Optimized Checkout Suite, including Link, Buy Now, Pay Later options, over 30 local payment methods, and AI driven fraud prevention tools via Stripe Radar. (Key Developments)
- The upgraded Stripe integration is available to Commerce.com merchants across the Americas, EMEA and APAC, with the ability to upgrade directly from the Commerce.com dashboard. (Key Developments)
- Commerce.com endorsed Google's Universal Commerce Protocol, aiming to create a common standard for agents and systems across the shopping journey and to support direct checkout from Google's AI Mode in Search and the Gemini app for eligible US retailers and Commerce.com merchants. (Key Developments)
Valuation Changes
- Fair Value: The model fair value estimate decreased from $6.50 to $4.96.
- Discount Rate: The discount rate assumption moved slightly higher from 10.86% to 10.89%.
- Revenue Growth: The long-term dollar revenue growth input was reduced from 4.15% to 3.80%.
- Net Profit Margin: The net profit margin assumption increased from 6.99% to 10.26%.
- Future P/E: The future P/E multiple was cut from 29.39x to 14.65x.
Key Takeaways
- Recruitment of experienced leaders and sales process reorganization are expected to enhance sales efficiency and drive profitable revenue growth.
- New product launches and market expansion could generate additional revenue streams, boosting overall growth.
- Ongoing top-line challenges, restructuring complexities, and conservative macroeconomic assumptions pose risks to future revenue growth and net margins.
Catalysts
About BigCommerce Holdings- Operates a software-as-a-service ecommerce platform for brands and retailers in the United States, North and South America, Europe, the Middle East, Africa, and the Asia Pacific.
- The company has recruited top leaders with extensive experience in SaaS and commerce, which is expected to enhance its strategic execution and potentially increase revenue growth.
- The reorganization of sales, marketing, strategic partnerships, and customer success is anticipated to improve sales efficiency and effectiveness, driving revenue growth while maintaining a focus on profitable operations.
- The integration of AI into sales processes aims to enhance customer targeting and support, likely leading to improved sales efficiency and higher net margins through cost-effective operations.
- The introduction of new products and bundled solutions like Catalyst, alongside an expansion into new markets such as B2B, is expected to drive additional revenue streams, contributing to overall revenue growth.
- Doubling the quota-carrying sales team by mid-2025 is projected to significantly expand sales capacity, potentially accelerating revenue growth and positively impacting earnings.
BigCommerce Holdings Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming BigCommerce Holdings's revenue will grow by 4.6% annually over the next 3 years.
- Analysts are not forecasting that BigCommerce Holdings will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate BigCommerce Holdings's profit margin will increase from -6.3% to the average US IT industry of 6.3% in 3 years.
- If BigCommerce Holdings's profit margin were to converge on the industry average, you could expect earnings to reach $24.4 million (and earnings per share of $0.28) by about July 2028, up from $-21.0 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 35.3x on those 2028 earnings, up from -19.6x today. This future PE is greater than the current PE for the US IT industry at 27.6x.
- Analysts expect the number of shares outstanding to grow by 3.02% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 9.33%, as per the Simply Wall St company report.
BigCommerce Holdings Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Failure to achieve revenue growth targets in 2024 highlights ongoing challenges in driving top-line expansion, which could impact future revenue projections.
- Net revenue retention for enterprise accounts finished at 99%, which is below both past performance and management's expectations, potentially affecting net margins.
- The company's transformation efforts are ongoing and complex, involving restructuring and new leadership, which introduces execution risks that could impact earnings.
- BigCommerce's macroeconomic assumptions for 2025 are conservative, but unexpected changes in consumer spending or business investment trends could pose additional risks to revenue growth.
- Tangible financial improvements, such as operating cash flow, may be offset by significant investments in sales capacity and leadership changes, putting pressure on net margins and earnings.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $7.556 for BigCommerce Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $11.0, and the most bearish reporting a price target of just $5.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $383.7 million, earnings will come to $24.4 million, and it would be trading on a PE ratio of 35.3x, assuming you use a discount rate of 9.3%.
- Given the current share price of $5.13, the analyst price target of $7.56 is 32.1% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
Have other thoughts on Commerce.com?
Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.
Create NarrativeHow well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
