Etsy’s Stock: Hold Rating Amid Uncertain GMS Momentum and Valuation Concerns

Analyst Nikhil Devnani from Bernstein maintained a Hold rating on Etsy (ETSY – Research Report) and keeping the price target at $45.00.

Nikhil Devnani has given his Hold rating due to a combination of factors impacting Etsy’s stock. The recent uptick in Etsy’s stock price, which rose by 32% since May 21, appears to be driven by short covering and a shift in investor sentiment. This change in sentiment is linked to improved alternative data indicating a decrease in year-over-year Gross Merchandise Sales (GMS) declines in May, suggesting a more positive outlook for Etsy’s growth.
However, the sustainability of this GMS momentum remains uncertain. While there are encouraging signs such as improved credit card data and increased monthly active users, these indicators do not always align closely with reported GMS figures. Additionally, there are questions about the long-term growth algorithm and whether recent positive trends will continue. Given these uncertainties and the fact that Etsy’s stock is not considered cheap based on GAAP P/E ratios, Devnani has opted to maintain a Hold rating until more consistent improvements in key performance indicators are observed.

Devnani covers the Consumer Cyclical sector, focusing on stocks such as Etsy, eBay, and Wayfair. According to TipRanks, Devnani has an average return of 25.2% and an 81.82% success rate on recommended stocks.

In another report released yesterday, J.P. Morgan also maintained a Hold rating on the stock with a $50.00 price target.