Analyst Nikhil Devnani of Bernstein maintained a Hold rating on Etsy, boosting the price target to $55.00.
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Nikhil Devnani has given his Hold rating due to a combination of factors impacting Etsy’s current and future performance. Despite a positive revenue surprise in the second quarter, the company’s Gross Merchandise Sales (GMS) continue to decline, which remains a significant concern. There is some optimism about potential improvements in GMS, especially with easing comparisons in the latter half of the year, but uncertainties about the underlying drivers of this improvement persist.
Moreover, while Etsy’s GMS per Buyer showed growth, the number of Active Buyers did not meet expectations, indicating a reliance on reactivated buyers rather than new ones. The company’s marketing efforts and app engagement are noteworthy, but the impact on buyer growth is yet to be fully realized. Additionally, while Etsy’s investments in areas like Depop could drive long-term growth, they currently weigh on margins, balancing out potential gains from ad revenue. These mixed signals contribute to the Hold rating, as the company navigates both challenges and opportunities.
In another report released today, Morgan Stanley also maintained a Hold rating on the stock with a $54.00 price target.