Shutterfly, Inc. (SFLY) - Bull of the Day

Shutterfly Inc.'s (SFLY) third quarter loss was lower than the Zacks Consensus Estimate, driven primarily by higher revenues from the photo book. Product innovation, a focus on developing a successful commercial printing business, strategic partnerships with retailers and opportunistic acquisitions also bode well for the company.

Although we find the ongoing economic weakness and rising unemployment hurting the company's profitability, we believe margins will further expand in the coming quarters backed by technology leverage, lower material costs and labor efficiency. The holiday season is also likely to act as a key driver of the stock in its ongoing fourth quarter.

Moreover, recent acquisition of WMSG will likely enhance Shutterfly's presence in the commercial printing market. Hence, we maintain our Outperform rating on the stock.
 
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