Etsy (ETSY) investors could be in line for a dividend bonanza following improved Q1 results, said a leading analyst as he hiked his price target on the stock.
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How Did Etsy Do in Q1?
The online marketplace struck a cautiously upbeat note when releasing Q1 earnings this week, pointing to improving growth, better monetization, and rising app engagement. It said that gross merchandise sales (GMS) reached $2.5 billion in Q1 2026, up 5.5% year over year, or 3.6% on a currency-neutral basis. This marked the second consecutive quarter of marketplace growth.
Revenue came in at $631 million with adjusted EBITDA of $185 million, translating to a healthy 29.3% margin. However, it warned that purchase frequency and several FX- and tariff-driven tailwinds remained challenges.
Capital for Shareholders
Bernie McTernan, analyst at Needham, reiterated his Buy rating on the stock following the results and upped his price target from $65 to $85.
He said that the first quarter update marked a “key inflection, with ETSY returning to GMS growth driven by product improvements across discovery and personalization.” He said that could best be seen by its mobile app now nearing around 50% of GMS and growing by double-digits.
He added that previously he had been concerned about whether ETSY could “fill the hole selling Depop would leave in its growth.”
ETSY said back in February this year that it had agreed to sell its secondhand online clothing platform Depop to e-commerce retailer eBay (EBAY) for $1.2 billion in cash.
“But after results it appears the ETSY marketplace is poised to fill this hole on its own. We think this creates the ability for ETSY to be more aggressive in returning capital to shareholders with the Depop proceeds. Assuming continued execution on its tech roadmap we think there should be upside to our estimates and the multiple,” he said.
Etsy has no dividend track record, so that would be a huge boost to shareholders.
Flurry of Price Hikes
JPMorgan analyst Bryan Smilek raised his price target to $75 from $58. He said Etsy had delivered the first quarter of meaningful marketplace growth since Q3 of 2023, He cited “healthier fundamentals” for the target boost.
UBS analyst Stephen Ju raised his target to $74 from $72. He said Etsy had highlighted improvements in machine-learning-based discovery and a streamlined seller listing process that aim to enhance buyer and seller experiences and support future GMS growth.
Is ETSY a Good Stock to Buy Now?
On TipRanks, ETSY has a Moderate Buy consensus based on 7 Buy, 12 Hold and 1 Sell ratings. Its highest price target is $85. ETSY stock’s consensus price target is $71.94, implying a 9.65% upside.
