Upbeat Earnings Release Puts Shutterfly Stock Short Sellers On Notice

Short sellers had already been covering in recent weeks

by Josh Selway

Published on May 2, 2018 at 9:15 AM
Updated on May 2, 2018 at 9:15 AM

Image-publishing specialist Shutterfly, Inc. (NASDAQ:SFLY) is set to rally after earnings today. The company reported a smaller-than-expected loss for the first quarter and revenue topped forecasts. An upwardly revised full-year outlook is also whetting investors' appetites, especially with the company saying in the earnings release that its recent acquisition of Lifetouch will "significantly increase the company's overall profitability."

As such SFLY shares are set to open up 10.6%, which would put them at $90.15, an all-time high. The stock's previous peak was $86.41 from back on March 13, and while the shares had pulled back some to close Tuesday at $81.55, they're still up roughly 64% year-to-date. Most of these gains came from a similar bull gap after earnings back in late January when the security surged almost 28% in one day.

There's room for a round of bullish analyst attention to drive Shutterfly even higher, too. As it stands now, just two brokerage firms recommend buying the equity, and the average 12-month price target is just $86.25. SunTrust Robinson is getting a headstart on the competition, this morning boosting its price target to $100 from $70.

Finally, short sellers could be feeling the pain today, since 17.4% of SFLY's float is dedicated to short interest. The number of shares sold short has actually been steadily declining in recent months, including a 7.5% drop in the last two-week reporting period. But there are still 4.74 million shares held by short sellers, or 6.2 times the average daily trading volume. This suggests the stock could continue to benefit from a short-squeeze.

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