Market Overview

Time To Take Profits In Shutterfly? Goldman Sachs Downgrades

Time To Take Profits In Shutterfly? Goldman Sachs Downgrades

After an encouraging two months, the ever-volatile Shutterfly, Inc. (NASDAQ: SFLY) has just about maxed its potential, according to Goldman Sachs. 

The stock earned a downgrade Wednesday aligning one analyst with the 20-percent short interest.

The Rating

Goldman Sachs analyst Christopher Merwin downgraded Shutterfly from Neutral to Sell and maintained a $46 price target.

The Thesis

Shutterfly’s 31-percent run since November is reflective of tax cut benefits and investor optimism, Merwin said in a note. (See the analyst's track record here.)

Merwin said he expects decelerated growth as Shutterfly suffers increased competition from, Inc. (NASDAQ: AMZN), market saturation and non-core brand closures.

“While we believe growth should rebound in the following quarters after lapping brand closures (we’re modeling flattish growth in 4Q17E), we struggle to see growth returning to the mid-single-digits or higher, which is what we believe is necessary for the stock to positively re-rate in the coming quarters,” the analyst said. 

At the same time, Goldman expects improving enterprise growth to yield a lower margin, and resulting compression may limit anticipated upside to earnings before interest, taxes, depreciation and amortization.

“If Shutterfly is able to show that Amazon is not taking meaningful share, there is still room for structural growth in photofinishing, and that there is further room for operating leverage, we could become more positive on the stock, as current pricing would then imply an inexpensively valued, high free cash flow yield business with plenty of runway,” Merwin said. 

Price Action

At the time of publication, shares were trading down 1.62 percent at $51.77. 

Related Links:

Blockchain Is The Biggest Thing Since The Internet

Internet Stock Catalysts: What's Ahead, Who Will Benefit And Who’s At Risk

Latest Ratings for SFLY

Jun 2019DowngradesBuyHold
Jun 2019UpgradesSellNeutral
Jun 2019DowngradesOutperformMarket Perform

View More Analyst Ratings for SFLY
View the Latest Analyst Ratings

Posted-In: Christopher Merwin Goldman Sachs Internet Stocks photofinishingAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (AMZN + SFLY)

View Comments and Join the Discussion!

Latest Ratings

ADBECleveland ResearchInitiates Coverage On283.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Mid-Day Market Update: Dow Surges Over 150 Points; HTG Molecular Diagnostics Shares Plunge

KBW Downgrades Citi On 'Meaningful Gap' In Outlook