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Costco Wholesale Corp
Shutterfly Inc. (SFLY) soared the most in more than three years after forecasting 2013 sales that were higher than analysts estimated as marketing and mobile tools help the online photo-sharing service expand its customer base.
The shares gained 20 percent to $40.40 at the close in New York, the biggest one-day advance since April 2009. The Redwood City, California-based company’s shares have increased 43 percent in the past 12 months, while (SFLY) the Russell 2000 Index has gained 10 percent.
Shutterfly, which turns digital photos into products such as photo books and greeting cards, said annual sales will rise as much as 17 percent as marketing, including a ship-to-store partnership with Costco Wholesale Corp. (COST), helps add customers. Consolidation in the market for Web-based photo services will help Shutterfly bolster revenue, said Victor Anthony, an analyst at Topeka Capital Markets.
“Shutterfly, with its innovative suite of product offerings, is taking share from profitability-challenged competitors,” Anthony, who is based in New York, said in a note today. He increased his price target to $45 from $40 and maintained his buy rating on the shares.
Annual sales for 2013 will increase to $739.7 million to $746 million. Analysts projected $709.4 million, the average of estimates (SFLY) compiled by Bloomberg.
Fourth-quarter revenue rose 33 percent to $351.8 million, beating the $310.1 million average of analysts’ estimates.
Transacting customers last year rose 31 percent to 7.1 million, while orders gained 29 percent to 16.3 million, according to a statement yesterday. The average order value fell 2 percent to $37.58, the company said.
“The vast majority of our new customer growth was organic, driven by our integrated marketing campaigns,” Chief Executive Officer Jeffrey T. Housenbold said on a conference call yesterday.
Corporate sales, which accounted for 2.4 percent of total revenue in the quarter, jumped 79 percent to $8.3 million, the company said. Shutterfly added new clients last year, including UnitedHealth Group and expanded existing relationships with AT&T Inc. (T) and Dell Inc. (DELL), Housenbold said on the call.
Corporate businesses should ease Shutterfly’s dependence on December holiday sales, said Brian Fitzgerald, a New York-based analyst for Jefferies & Co., who has a hold rating on the stock.
“The enterprise business, which is small, is growing rapidly,” he said in a telephone interview. “It will smooth out their earnings over the year.”
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