Is Shutterstock Worth $80/Share?

In a report published Tuesday, Raymond James analysts initiated coverage of

with an Outperform rating and a price target of $80. Shuttersotck is "well positioned" in the digital imagery market with royalty-free stock images as its core focus. "Additionally, Shutterstock is addressing emerging and faster-growing segments, including video and music, and recently entered the editorial segment", the analysts said. Shutterstock's collection of over 50 million images and video clips, from over 70,000 contributors, creates a network effect and solves some key challenges of the digital imagery market. "A large collection of digital content attracts new customers, which generates more royalties and thus attracts more contributors, resulting in a virtuous cycle," the analysts noted. Increasing global penetration, emerging content types such as video and music, increasing penetration of larger enterprises and media agencies, and strategic acquisitions and partnerships are expected to drive more than 20 percent growth in the long term. "Shutterstock has a highly predictable revenue stream as evidenced by ~100% annual revenue retention. Additionally, given the marketplace nature of the model and its scale, Shutterstock enjoys high EBITDA margins that should reach 30%+ long term vs. ~22% in 2014," the report added.