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Shutterfly Analysts Weigh Potential Acquisition

Brett Hershman

Shutterfly, Inc. (NASDAQ: SFLY) shares are suffering following a fourth-quarter earnings and sales miss Tuesday — and CEO Christopher North's announcement that he's stepping down.

A strategic review committee is now reviewing the company’s capital structure, according to Shutterfly.

KeyBanc: M&A Potential Provides 'Backstop To Valuation'

Shutterfly’s risk-reward profile is attractive, and a potential acquisition could be in the works, analyst Edward Yruma said in a Tuesday note.

“The formation of a strategic review committee to evaluate alternatives was driven by recent inquiries by a third party about a potential acquisition of the company. While no proposals have been received, we believe that the potential for an acquisition should provide a backstop to valuation,” the analyst said.

KeyBanc maintains an Overweight rating on Shutterfly with a $55 price target.

RayJay Expects Rangebound Shares

Shutterfly’s softer Q4 consumer growth was largely expected, analyst Aaron Kessler said in a Wednesday note.

“While valuation is not demanding at 6x 2020 EBITDA, we believe share prices are likely to remain rangebound until we see an improvement in consumer growth trends and improved EBITDA performance,” the analyst said.

Raymond James maintained a Market Perform rating on Shutterfly.

Aegis Lifts Price Target 

The weak quarter was expected and came in even weaker than Aegis projected, but what the sell-side firm did not anticipate was the acquisition interest and the board undergoing a strategic review, analyst Victor Anthony said in a Wednesday note.

View more earnings on SFLY

Shutterfly went down this road before when a financial buyer sought to acquire the company several years back, the analyst said.

While Anthony said he's unsure whether the potential buyers are financial or strategic this time, the best bet for investors is to hang on to shares in the interim, he said.

A strategic acquirer could pay $70 per share, whereas a financial acquirer could pay $60 per share for the company, Anthony said.

Aegis Capital maintains a Buy rating on Shutterfly and raised the price target from $55 to $65.

Price Action 

Shutterfly shares closed down 2.8 percent at $43.96 Wednesday.

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Latest Ratings for SFLY

Date Firm Action From To
Feb 2019 Goldman Sachs Initiates Coverage On Sell
Jan 2019 KeyBanc Upgrades Sector Weight Overweight
Dec 2018 Baird Maintains Neutral Neutral

View More Analyst Ratings for SFLY
View the Latest Analyst Ratings

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