* FTD reported a Modest Beat & In-Line March Quarter - revenue of $128.6MM vs. $125MM Street/$123.2MM Citi, EBITDA of $19.6MM vs. $19.0MM Street/$19.8Citi, and GAAP EPS of $0.26 vs. $0.23 Street/$0.24Citi. Upside was mostly due to stronger than expected consumer orders.
* Fundamentals modestly improved – Revenue growth accelerated to 3% Y/Y (9% normalized) from 0.9% Y/Y in Dec. EBITDA margin of 15.1% was essentially flat Y/Y. FCF conversion reached a record-high 51%
* Upgrading to Buy & Raising PT to $14. Risks remain competition in 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) 'Net reached record-high 91% of consumer orders; 4) Consistent share buybacks could lead to 10%+ of the float being bought; & 5) 9% FCF yield is attractive.