In a research report released May 6, Canaccord Genuity analyst Michael Graham reiterated a Hold rating on Zulily Inc (NASDAQ:ZU) with a $10 price target, which reflects a potential downside of 7.0% from last closing price. The report follows the company’s first-quarter results, as customer growth was disappointing and customer outlook worsened.

Graham noted, “We believe rising social media ad prices, high transaction-oriented churn, and less effective marketing spend are all contributing to weakened guidance. While there were a few positives to the quarter, including 30% gross margin from fulfillment automation finally coming through, the customer acquisition and branding issues are enough to dampen outlook. 2015 will continue to be a tough year for zulily as it throttles back marketing spend and likely continues to see churn from any remaining direct response customers. The share repurchase program and opex leverage may lend modest support, but we think the rapid revenue deceleration will pressure the stock for now.”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Graham has a total average return of 16.3% and a 53.7% success rate. Graham has a -61.0% average return when recommending ZU, and is ranked #146 out of 3594 analysts.