Shutterstock Analyst Bumps Up Price Target By 45% As AI Gains Steam

Needham analyst reiterated a Buy rating on the shares of Shutterstock Inc SSTK and raised the price target from $62 to $90.
In Q4, Enterprise grew 30% Y/Y on a constant currency basis, putting an exclamation mark on the acceleration from -2% contraction in '20, to +10% constant currency growth in '21 to +20% in '22, noted the analyst.
Growth is being driven by multi-asset subscriptions, multiple Computer Vision deals (generative AI), strong momentum in studios/editorial and benefits from M&A.
Despite these growth tailwinds, the analyst forecasts Enterprise growth to decelerate in '23E to high single digits on a constant currency basis.
The most important thing the analyst learned is that Computer Vision training deals do have a recurring aspect to the revenue. This has given analyst confidence in SSTK's ability to benefit from the seemingly mega-trend of generative AI over multiple years.
Following up on the announced partnership with OpenAI and LG last quarter, SSTK has struck a Computer Vision deal with Meta Platforms, Inc. META to train their generative AI model and enhance their ML capabilities.
Computer Vision deals positively impacted Q4 and are a source of the Enterprise acceleration in the quarter, added the analyst.
One of only a few leading players in the $6 billion stock content industry, the analyst believes spending on digital advertising will continue rising as the world shifts online.
The analyst foresees benefits for the entire industry from the growth of E-commerce and a reallocation by brick & mortar companies of spending associated with physical retailing to digital advertising.
Price Action: SSTK shares are trading higher by 3.61% at $78.31 on the last check Friday.

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