Shutterfly Investors Needn't Fear Amazon Prints Just Yet

Axiom said in a research note released Thursday Shutterfly, Inc. (NASDAQ: SFLY) investors, who unfairly punished its stock following the launch of a competing Amazon.com, Inc. (NASDAQ: AMZN) service, needn't fear about it, at least for now.

Muted Near-Term Impact

Analyst Victor Anthony believes the near-term impact of Amazon Prints on Shutterfly's revenues and profits, particularly for the key fourth-quarter holiday season, will be muted.

Solid Q3

Axiom noted that the company's third-quarter revenues and adjusted EBITDA beat its estimates, with core Shutterfly brand growing in double-digits and gross margins at consumer and enterprises expanding.

Outlook

Shutterfly's fourth-quarter revenue and adjusted EBITDA outlook surrounded the consensus estimates, the firm noted.

Valuation Cheap

With shares trading at a low 6.3 times its 2017 adjusted EBITDA estimate and a roughly 10 percent free cash flow yield, Axiom sees the stock's valuation as cheap. This, according to the firm, is despite all elements making for a compelling investment, such as strong management, market leadership, growing cash flow, capital returns, clean accounting and an undemanding valuation, present.

As such, Axiom upgraded the shares of Shutterfly to a Buy from Hold, while it maintained its $52 price target.

At last check, shares of Shutterfly were up 10.53 percent at $46.50.