Barron's Warns Shutterfly (SFLY) Will Continue to Underperform as Investors Worry
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Since the stock reached a high of $66.70 back in April of 2011, shares of Shutterfly (Nasdaq: SFLY) have fallen over 56 percent to $29 as rising completion continues to weigh heavy on the company's margins and market share.
Barron's notes that even following the substantial price reduction, shares of SLFY still trade at 49 times its 2010 earnings and at 63 times its 2011 earnings outlook. The financial paper believes shares will continue to fall; potentially as low as $20 per share if management reports disappointing fourth quarter results.
The Street is forecasting the company reporting earnings of $1.01 per share for the fourth quarter. However, due to rising price competition, which management confirmed on November 28 and resulted in a 12 percent stock slide, it may be lower as the company offers its own promotional deals in a effort to retain market share.
Some of the company's increasing completion comes from heavy-hitters such as Apple (Nasdaq: AAPL) and Hewlett Packard (NYSE: HPQ).
Apple back in October introduced a new app for the iPhone and iPad which only costs $2.99 and allows users to create and send greeting cards. Barron's reports Shutterfly charges $3.46 per photo for a similar service. HP also recently ran a promotional deal "Buy one Get Two Free" on photo books from Snapfish. Shutterfly recently ran a promotion offering "Buy One Get 50% Off the Second One" on photo books.
Analysts are beginning to revise their earnings estimates for the fourth quarter following management's comments on November 28.
Barron's notes that even following the substantial price reduction, shares of SLFY still trade at 49 times its 2010 earnings and at 63 times its 2011 earnings outlook. The financial paper believes shares will continue to fall; potentially as low as $20 per share if management reports disappointing fourth quarter results.
The Street is forecasting the company reporting earnings of $1.01 per share for the fourth quarter. However, due to rising price competition, which management confirmed on November 28 and resulted in a 12 percent stock slide, it may be lower as the company offers its own promotional deals in a effort to retain market share.
Some of the company's increasing completion comes from heavy-hitters such as Apple (Nasdaq: AAPL) and Hewlett Packard (NYSE: HPQ).
Apple back in October introduced a new app for the iPhone and iPad which only costs $2.99 and allows users to create and send greeting cards. Barron's reports Shutterfly charges $3.46 per photo for a similar service. HP also recently ran a promotional deal "Buy one Get Two Free" on photo books from Snapfish. Shutterfly recently ran a promotion offering "Buy One Get 50% Off the Second One" on photo books.
Analysts are beginning to revise their earnings estimates for the fourth quarter following management's comments on November 28.
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