UPDATE: Bank of America Initiates Shutterfly with Buy, $40 PO; Negative Sentiment Overdone
Bank of America initiated coverage on Shutterfly (NASDAQ: SFLY) with a Buy rating and a price objective of $40.
Bank of America noted, " With the stock down ~50% from its 2011 highs due to photo book pricing pressure, we believe the 7x valuation discounts a challenging pricing environment in 2H12. We expect Shutterfly's scale advantage from recent acquisitions to offset some pricing pressure, and we expect the pricing environment to improve modestly over the next 12 months as HP/Snapfish restructures and eliminates channel conflicts (see pg 6). While sentiment is negative, we think investors will be rewarded as Shutterfly leads the segment's consolidation and margins expand in 2013E due to modestly better pricing and accretion from recent acquisitions."
Shufferfly closed at $31.42 on Tuesday.
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