Barclays Maintains an 'Overweight' on Shutterfly (SFLY); Stress-Testing the Downside

Barclays maintains an 'Overweight' on Shutterfly Inc. (NASDAQ: SFLY) price target of $73.00.

Barclays analyst says, "What's New?: Shutterfly shares are down 41% (vs. the S&P 500 which is flat over the same period) since the 3Q11 report on 10/26/11 due, we believe, to: 1) a mixed 3Q11 report; 2) concerns about potential earnings downside due primarily to heightened promotional activity by some competitors; and to a lesser degree, 3) concerns of a possible dilutive acquisition."

"Our Recommendation: While it's still early in the holiday shopping season, early promotional activity by competitors suggests there could be risk to estimates. How much, or if at all, remains highly uncertain, in our view. That said, following the steep sell-off, the company is now trading at 8x EV/CY12 EBITDA using our stress-test estimates, which represents the low-end of the comps and near the trough level of the historical range for the group. As such, we believe the stock could be at or near trough levels but, 1) there's more shopping ahead, and 2) the stock could be choppy near term with the risk of negative earnings revisions. We note that even considering our stress-test case, we still forecast pro forma growth of 20%-plus in CY12."

For an analyst ratings summary and ratings history on Shutterfly Inc. click here. For more ratings news on Shutterfly Inc. click here.

Shares of Shutterfly Inc. closed at $27.56 yesterday.

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