Topeka Maintains Buy On Shutterfly Following Release Of 2Q14 Results


In reaction to Shutterfly’s (SFLY) 2Q14 results, yesterday, Topeka Capital analyst Victor Anthony maintained a Buy rating on SFLY with a $58 price target.

Anthony laid out the gist of the quartlery report, “Revenue of $159.148mm, +19.2% YoY, was 2.7% above the TCM estimate and 1.4% above consensus. Consumer revenue accelerated to 20% YoY from 19% YoY in 1Q14, and topped our estimate by $5.8mm, or 4%. Growth was partially offset by Enterprise revenue which grew 4.7% YoY and was $1.75mm shy of our estimate. Core Shutterfly brand revenue grew 21% YoY, quelling bear concerns of low single-digit organic growth. Management expects Enterprise revenue growth to reaccelerate in 2H due to order growth. Adj. EBITDA of $11.7mm, was 84% above our estimate of $6.4mm, due, in part, to a shift of marketing expenses and hiring into 3Q, and product efficiencies (gross margins 110bps above our expectation). GAAP EPS of ($0.70) was better than our ($0.72) estimate”.

The analyst added, “The core drivers of customer growth, order growth, and AOV growth, were all strong, and the Shutterfly brand grew revenues 21% YoY, meaningfully above the growth rate of e-commerce. The Adj. EBITDA outperformance was, in part, due to shifting of expenses into 3Q. Management did not address the buyout speculation, which we see supporting the shares”. Anthony went on to say that “Investors who are patient can buy into the shares and wait out an acquisition”.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform analyst Victor Anthony has a 21.1% average return and a 73.3% success rate. Anthony has a -4.6% average return when recommending SFLY, and is ranked #38 out of 3195 analysts.

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