We are upgrading our recommendation on the shares of Shutterfly (SFLY) to Outperform. Increased usage of digital cameras combined with accessibility of high-speed internet provides significant expansion potential for the company.
Product innovation, strategic partnerships with retailers and opportunistic acquisitions also augur well. We believe Shutterfly’s focus on developing a successful commercial printing business aided by strategic partnerships will significantly contribute to its earnings.
On the downside, we see a continuation of pricing pressure in its printing business. Also, a weak economy and rising unemployment will negatively impact the company’s profitability as the consumers’ discretionary spending is expected to be restricted in the near term.Zacks Investment Research
