We are initiating coverage on shares of VistaPrint, Ltd. (VPRT) with a Buy rating and a price target of $40 per share. VistaPrint is a leading online supplier of high-quality graphic design services and customized printed products to small businesses and consumers.
VPRT has generated significant organic growth over the last several years, and we project that this growth will continue. The company's primary targeted market of small businesses with fewer than 10 employees is substantial, providing VistaPrint with significant growth potential.
The company has several competitive advantages that we expect will enable it to outperform its peers. VistaPrint’s operating fundamentals are strong, and the company is in very solid financial position. We consider the current valuation to be attractive.
On August 12, 2008, VistaPrint announced that the company's Board of Directors had authorized the repurchase up to $50 million of the company’s outstanding common shares. VPRT is authorized to make repurchases in public or private transactions. The release noted that the company has a cash and marketable securities of $130 million at the close of the second quarter.
Shares of VPRT currently trade at approximately 28.9x and 21.8x our 2009 and 2010 EPS estimates, respectively. On a non-GAAP basis (excluding share-based compensation), the shares trade at 21.0x and 16.0x our 2009 and 2010 EPS estimates respectively. Excluding net cash and securities of approximately $2.30 per share, VPRT is trading at 26.9x and 20.3x our 2009 and 2010 GAAP EPS estimates, respectively, and at 19.5x and 14.9x our 2009 and 2010 non-GAAP EPS estimates, respectively.