Shutterstock Is 'Empowering' Customers, Cantor Reiterates Buy

February 26, 2015

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Cantor Fitzgerald reiterated its Buy rating on Shutterstock Inc (NYSE: SSTK) Friday and maintained a $100 price target following an "upbeat analyst day" while praising the company for "empowering the world's storytellers."

Analysts led by Youssef Squali noted that "management not only highlighted the significantly expanded addressable opportunity ahead, but also laid down a path to $1B+ in revenue, with meaningful margin expansion at scale."

Squali felt that the continued "secular shift to digital content and workflow, a differentiated offering, a large addressable market, and a favorable competitive environment" where among the most positive factors for the company.

Discussing the addressable market, the company's expansion into video, music, editorial and digital asset management "doubled its TAM from ~$4 billion to ~$8 billion, arguably laying out a longer runway for top-line growth," according to the analysts.

With a larger market, the company was also able to detail its path towards achieving $1 billion in revenue. Squali noted four growth vectors:

1. "Leading the market through product innovation and rapidly growing selection."
2. "Robust growth in Enterprise revenue," which was expected to grow from 20 percent to 40 percent of revenues over time.
3. "Growth in video, music, and editorial" could add $50-$100 million in revenue.
4. "Providing tools and workflow solutions to customers" could add over $100 million in revenue.

Management believed that, at scale, EBITDA margins should increase by 300-700bps to 28-32 percent, compared to 25 percent in Q4 2014.

Squali felt that the impact from the acquisition of Fotolia by Adobe Systems Incorporated (NASDAQ: ADBE) would be limited and that Shutterstock "has since 2003 proven an ability to compete effectively against larger players, with a superior offering, a larger portfolio, and better search."

Shutterstock recently traded at $57.12, down 0.70 percent.