We have recently upgraded
Vistaprint N.V.
(
VPRT
) to Neutral from Underperform based on better-than-expected fiscal
first quarter 2012 results, an upbeat guidance, deeper focus on
inorganic growth as well as international expansion. The positives
were, however, partially offset by margin pressure and execution
risk related to a set of initiatives taken by management to revamp
its business.
Vistaprint's first-quarter adjusted earnings per share beat the
Zacks Consensus Estimate. The company registered a 25%
year-over-year growth in revenues which surpassed the Zacks
Consensus Estimate as well.
Buoyed by the momentum, management guided higher for full-fiscal
2012 adjusted earnings in the range of $1.74 to $1.86 (versus $1.58
to $1.68 provided in August) per share. Management expects to gain
$2 billion revenue over the next five years.
Vistaprint has grown at a rapid pace, increasing annual revenues
from $6.1 million in fiscal 2001 to $817.0 million in fiscal 2011,
and all of its growth since inception has been organic. However, of
late, management is concentrating on strategic partnerships and
acquisitions to spur future growth. The new alliance with Staples
will extend Vistaprint's reach to 1,600 retail locations of the
former across the U.S.
The company is also strengthening its geographical footprint. In
Europe, Vistaprint has a strong distribution channel and customer
base. With the recent acquisition of Dutch photo book and photo
product company Albumprinter Holding B.V., Vistaprint further
strengthened its pan-European customer base. This Dutch acquisition
is expected to add about $37 to $39 million of revenue for the
remainder of fiscal 2012. Compared with Europe, the company has a
negligible presence in Asia Pacific. The company plans to enter
into markets apart from its existing ones followed by the increased
traction experienced in that region. In the first quarter of 2012,
Vistaprint had 45% constant currency growth in Asia Pacific, up
from 39% recorded in the prior quarter.
On the flip side, net margins in fiscal 2012 will likely be
lower than fiscal 2011 due to higher investments in manufacturing
to improve product quality and lower unit manufacturing costs as
well as in marketing to facilitate revenue and earnings growth over
five years. However, all of management's initiatives to revive its
business involve certain execution risks.
Furthermore, first quarter earnings beat the consensus, but
decreased 14% year over year. The company expects only modest
earnings growth from fiscal 2012 to 2013, and then strong growth in
fiscal years 2014 through 2016.
The nagging tension over the Euro-zone debt crisis also poses
some concerns given Vistaprint's increasing exposure in that
region. The fact can be validated by the deceleration in sales
growth in Europe in the first quarter of 2012.
Vistaprint, which competes with the likes of
TeleTech Holdings Inc.
(
TTEC
) and
Sykes Enterprises Inc.
(
SYKE
) currently, retains a Zacks #3 Rank that translates into a
short-term Hold rating.
SYKES ENTRP INC (
SYKE
): Free Stock Analysis Report
TELETECH HLDGS (
TTEC
): Free Stock Analysis Report
VISTAPRINT NV (
VPRT
): Free Stock Analysis Report
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