Shutterfly Price Target Cut Before Earnings

SFLY shares have struggled since their June peak

by Josh Selway

Published on Feb 1, 2019 at 2:40 PM

Shutterfly, Inc. (NASDAQ:SFLY) was last seen 2.4% lower at $44.87, as traders react to a sharp price-target cut to $70 from $90 at SunTrust Robinson. This comes as the company prepares to report earnings after the close next Tuesday, Feb. 5. Looking back, the shares suffered notable post-earnings losses of 17.4% and 5.6%, respectively, after Shutterfly's last two earnings releases, though in this quarter last year they jumped almost 28% the session after reporting.

Direction aside, options traders are at least betting on a sizable move after SFLY's release. For now, the market is pricing in a 15.8% post-earning move from the security, and data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows somewhat bullish sentiment, judging by the strong demand for long calls over puts in the past two weeks -- though this was amid low absolute volumes.

At the same time, the interest in calls could be from Shutterfly short sellers. These bears control 12.5% of the stock's float, and buying calls would allow them to hedge against an unexpected upside move in the shares.

Turning to the charts, SFLY got crushed in the second half of 2018. The security touched an all-time high of $100.34 on June 5, and then promptly sold off for months before bottoming at $35.08 on Christmas Eve -- an area that acted as a technical floor for the equity from 2013 to the end of 2017. The stock is now testing the support of the 50-day moving average, a former layer of resistance.

sfly stock chart


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