Shutterfly (SFLY) Spikes On Buyout Rumors

Shutterfly (SFLY) shares jumped as much as 17 percent in early morning trading Wednesday after Bloomberg reported that the digital photo services and storage options company has hired Qatalyst Partners to help explore sales.

The report said that potential buyers for the Redwood City, California-based company could include private-equity firms as well as e-commerce and web storage firms. Topeka Capital analyst Victor Anthony weighed in on the possibility of a sale, saying that a takeover of the $1.92 billion market cap company would be worth about $70 per share. SFLY last closed at $49.79, meaning more than 20% of upside remains in the stock, according to Anthony, if Shutterfly is acquired.

In its most recent earnings report, Shutterfly posted revenues of $137.1 million, while the net loss widened to $34.2 million from $12.4 million. Last year, the company generated revenues of $783 million, which grew 22% from a year earlier. This year however, the company that allows its customers to print photos onto items like mugs, pillows, and iPad cases, may post its first annual net loss since its 2006 IPO, according to estimates compiled by Bloomberg.

Shares of Shutterfly had an intraday range of $48.66 – $50.39. They are down nearly 11% on a y/y basis and off about 17% from their August 2, 2013, $59.93 52-wk high. The T12 revenue at SFLY is $804 million. Shutterfly’s PEG ratio is (8.30).

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