Etsy’s Mixed Performance: Hold Rating Amid Growth and Challenges

Analyst Nathan Feather of Morgan Stanley maintained a Hold rating on Etsy, boosting the price target to $54.00.

Nathan Feather has given his Hold rating due to a combination of factors affecting Etsy’s performance. The company has shown some acceleration in its core Gross Merchandise Sales (GMS) growth, attributed to structural improvements in products and marketing, as well as reduced advertising competition. However, the guidance for the third quarter suggests a potential decline in core GMS growth, indicating that while there are positive developments, challenges remain.
Despite these improvements, the forecasted EBITDA margin is lower than expected, partly due to increased marketing spend for Depop. While there is evidence supporting a bullish outlook, particularly with product enhancements and easing competition, the mixed frequency and cohort metrics suggest that further improvements are needed before a more optimistic stance can be adopted. Additionally, the upcoming closure of the de minimis exemption is seen as a potential short-term obstacle, contributing to the cautious Hold rating.

In another report released today, Barclays also maintained a Hold rating on the stock with a $60.00 price target.