Cowen & Co Initiates Coverage on Shutterfly (SFLY) with a Neutral

October 2, 2008 9:03 AM EDT

Cowen & Co initiates coverage on Shutterfly (Nasdaq: SFLY) with a Neutral.

Cowen analyst says, "We expect Shutterfly's revenues to grow at a five-year CAGR of 17% as consumers increasingly use online services to create and print personalized media. Nevertheless, we expect the company to continue to experience lower demand and returns in the near-term due to: (1) the weak macro environment, especially since the company sells a highly discretionary product that has a free substitute (shared online photos); (2) price competition; and (3) a ramp in R&D to develop new printing products, design features, and photo sharing services... We expect the weak economy to weigh on growth through next year. Shutterfly sells a highly discretionary product...Cost cutting and monetization initiatives should boost margins in 2009."

Shutterfly, Inc. is an Internet-based social expression and personal publishing service that enables consumers to share, print and preserve their memories through photos by using the Company's technology, manufacturing, Web-design and merchandising capabilities.

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