FTD's Mother Day Sales Up, Raises Guidance (FTD)

Citigroup analyst Mark Mahaney sent a note to clients on FTD Group Inc (FTD), following the company's report of strong Mother's Day sales -- key excerpts:

FTD disclosed this morning that total consumer orders were up 12%Y/Y during the Mother's Day season. For context, total consumer orders were up 9% Y/Y during the Mother’s Day season in 2005 and 6%Y/Y in Q1:06.

As a result, the company increased its June Q guidance by as much as 25% -- revenue goes from a range of $126MM-$136MM to $136MM, EBITDA from $18.7MM to $20.2MM, and GAAP EPS from $0.20 to $0.25. (FTD reports on a fiscal year basis so the upped guidance applies to the final quarter of year.)

We reiterate our Buy and our $14 target price. Risks remain competition in the Consumer & Florist segments and ramping marketing costs. But: 1) FTD's consumer growth has recovered to reasonable levels (13-14% Y/Y); 2) FTD is generating a potentially material new revenue stream in Net advertising; 3) Consistent share buybacks could reduce the float by 10%+; & 4) FCF yield at 8% remains attractive.

FTD 1-yr chart: