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Vistaprint NV (VPRT)

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Vistaprint NV's (VPRT) earnings for the first quarter of fiscal 2012 were well ahead of the Zacks Consensus Estimate. However, we believe that the slow pace of the economic recovery, coupled with huge investments in 2012 and 2013 to attract customers, will restrict improvements in its top as well as bottom lines.

The new set of initiatives also involves increased risk and lack of visibility toward return on investments at the current level. Substantial exposure to international markets also makes the company vulnerable to currency fluctuation risks. In fact, huge concentration in the European market remains a cause of concern owing to the Euro-zone debt crisis.

Our six-month target price of $28.00 equates to 24.6x our earnings estimate for fiscal 2012. This price target implies an expected total negative return of 8.1% over that period. Hence, we downgrade the stock from a Neutral to Underperform recommendation.

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