UPDATE: Morgan Stanley Upgrades Shutterfly to Overweight (SFLY)

Morgan Stanley is out with its report today on Shutterfly (NASDAQ: SFLY), upgrading SFLY from Equal-weight to Overweight.

In a note to clients, Morgan Stanley writes, "We upgrade Shutterfly to Overweight with a $70 price target. Long-term estimates are too low, as they exclude continued share gains and the economics of the Tiny Prints acquisition. Additionally, we believe the market is failing to award Shutterfly a multiple that is in line with other eCommerce category leaders (based on our sector view, best in class leaders are valued at 18-23x C12E EBITDA; our base case valuation leaves upside for the market to recognize its proper place at the top of its category)."

Morgan Stanley has a $70 PT on SFLY.

At the time of posting, shares of SFLY were trading pre-market at $58.50, up 3.48% from Wednesday's close.