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Shutterfly is
scheduled to report Q208 results after the market closes on July
30. Based on our analysis, we at
eChristianInvesting are expecting SFLY to report
disappointing results that fail to meet Wall Street’s consensus
expectations.
Analyst
Expectations
We are
forecasting revenues of $35.6M versus analyst consensus of
$36.2M. This would represent a 19% increase in revenues from
last year’s $29.9M in the same period.
With
consumers looking to tighten their budgets this year, we believe
that discretionary products such as those offered by
Shutterfly have
suffered as a result. While traffic appears to have remained
strong, it is our belief that visitors are coming to look rather
than to buy. This is further reinforced by the increased
promotional offers that the company has touted in recent weeks.
Share
Performance
To date,
Shutterfly’s shares have dropped almost 60%. Meanwhile, the
NASDAQ has only fallen 16%. Unfortunately for Shutterfly’s
investors, their shares have been one of the worst performers of
2008 after yielding a phenomenal 78% return in 2007.
Valuation
Shares are
now trading at 34x consensus 2009 EPS estimates. Despite the
large drop in price, SFLY’s shares still trade at a healthy
premium to their peer group. This premium valuation combined
with the potential for disappointing quarterly results and the
continued bleak outlook for the economy should continue to weigh
these shares down for the remainder of the year.
At the time this article was published, the author did not have
a financial position in any of the stocks mentioned in this
article.
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