Why We Have Revised Our Price Estimate For Shutterfly Upwards

+0.25%
Upside
50.97
Market
51.10
Trefis
SFLY: Shutterfly logo
SFLY
Shutterfly

Earlier this month, Shutterfly (NASDAQ:SFLY) reported a better-than-expected earnings for the September quarter.  Having reflfected in the results, we are revising pur model.  Let us breifly review:  Revenues were recorded at $187.3 million, a 12% increase over the third quarter of 2015 on the back of strong demand at the flagship Shutterfly and SBS businesses. Furthermore, the company has updated its guidance for Q4, with EPS expected to be in the range of about $2.57 to $2.86 and revenues in the range of $557 to $587 million.

Screen Shot 2016-10-28 at 1.41.53 PM

Shutterfly successfully launched its new Shutterfly mobile apps on iOS and Android. The apps were shipped out in September, well ahead of the busy holiday season. The new apps are a significant improvement in several ways. Apart from a variety of services already prevalent, the apps now allow users to create and purchase cards and stationary (the company’s largest category by annual revenue). The improved app experience counts as customers are moving rapidly to mobile devices. In the third quarter, customers downloaded the app more than a million times. Purchases made on the mobile platform increased at a double digit rate, representing almost 24% of overall Shutterfly brand revenue in the quarter.

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Further, in 2015, the company hit the $1 billion mark in terms of revenues and is looking to keep the momentum going this year as well. This is evident from the revised guidance and confidence displayed by upper management. Given all the aforementioned factors, we have decided to revise our price estimate for SFLY upwards to $51.53 per share.

 

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Shutterfly

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