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Axiom's Anthony Steps To The Sidelines On Shutterfly

Axiom's Anthony Steps To The Sidelines On Shutterfly - Shutterfly, Inc. NASDAQ:SFLY

Axiom’s Victor Anthony mentioned that Shutterfly, Inc.’s SFLY 1.27% EBITDA multiple has expanded 35 percent since late February.

Anthony downgraded the rating on the company from Buy to Hold, attaching a price target of $52.

“We continue to believe that Shutterfly is exposed to a large market opportunity that is moving online, the company is likely to maintain its dominant market position, and new CEO Chris North… can continue to drive this business forward,” the analyst stated.

What Will Make Anthony More Constructive?

While moving to the sidelines, Anthony said there were some aspects that could get him to be more constructive on the stock.

The analyst pointed out that for the past several quarters, the company’s enterprise business, Business Solutions, has driven outperformance versus the estimates, while the core consumer segment has lagged.

“Evidence that Shutterfly 3.0 will drive the core brand back to sustained double-digit growth, and weaker performing high-end brands such as Tiny Prints and Wedding Paper Divas are returning to growth, could get us more positive,” the analyst explained.

While lapping infrastructure investments and declining investment spend were expected to lead to meaningfully faster adjusted EBITDA growth a margins of more than 20 percent, although evidence of this is yet to be seen.

“The balance sheet has capacity for more leverage. A more aggressive share repurchase could get us more positive,” according to the Axiom report.

The analyst also believes partnerships with key companies could also be a game changer for Shutterfly.

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Jul 2016Axiom CapitalDowngradesBuyHold
Apr 2016Goldman SachsMaintainsNeutral
Apr 2016BarclaysMaintainsEqual-weight

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