Morgan Stanley analyst Brian Essex downgraded Shopify to Underweight from Equal Weight, citing his view that the stock is not deserving of the same multiple as high-growth U.S. Software-as-a-Service companies as less than half of Shopify's revenue comes from subscriptions. Most of Shopify's revenue is transaction-based and its mix is shifting increasingly toward transaction-based revenue, said Essex, who adds that he thinks investors are overpaying for Shopify's Merchant Solutions business at the stock's current valuation. Essex raised his price target on Shopify shares to $209 from $173, however, as he changed his valuation framework to sum-of-the-parts from discounted cash flow.

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