Analyst: Shutterstock Gains Ground In Content Service

Shutterstock Inc SSTK's plan to set up a stock image deal with privately held Penske Media Corp. suggests the company is gaining ground in its goal to obtain up to 10 percent of its revenue from editorial content licensing.

Shutterstock, which offers stock photo services is "intent on expanding into a segment long dominated by Getty and Corbis," Cantor Fitzgerald's Youssef Squali said Tuesday.

Shutterstock earlier this year acquired European photographic press agency Rex Features for an undisclosed price. It announced the deal with Penske Monday.

Penske, which owns about 25 media brands including Variety and Women's Wear Daily, previously had a similar agreement with Getty Images.

"We were troubled by Getty's current financial condition, because of its excess debt," CEO Jay Penske told the Financial Times, which noted that Getty was acquired by the buyout group Carlyle in 2012, and has debt of $2.5 billion, according to credit rating agency Moody's.

Penske said that the long-term value of the Shutterstock partnership for his company will top $50 million.

Adobe Systems Incorporated ADBE completed its $800 million acquisition of stock photo provider Fotolia earlier this year, and recently launched a competing service.

But Squali, who maintains a Buy rating and $100 target on Shutterstock, said the deal with Penske shows that it "continues to innovate and gain market share."

Shutterstock aims to obtain between $50 million and $100 million in annual revenue from editorial content licensing as a part of its $1 billion revenue target, Squali said.

Shutterstock posted 2014 revenue of about $328 million.

The company's shares are off more than 12 percent in the past three months, and closed Tuesday at $62.35, up $0.97.