Bernstein analyst Nikhil Devnani has maintained their neutral stance on ETSY stock, giving a Hold rating yesterday.
Nikhil Devnani has given his Hold rating due to a combination of factors surrounding Etsy’s strategic decisions and financial performance. Etsy’s recent announcement to sell Reverb, a musical instrument marketplace, is seen as a move to concentrate on its core marketplace and Depop. While this decision might help Etsy refocus its efforts on boosting Gross Merchandise Sales (GMS) growth, there is speculation that monetizing Depop could potentially unlock more value for shareholders in the future.
Reverb’s sale is expected to slightly improve Etsy’s consolidated adjusted EBITDA margin, as Reverb has been roughly breakeven from an EBITDA perspective. However, the financial terms of the sale have not been disclosed, leaving some uncertainty. Additionally, Depop, which has shown significant growth, particularly in the US market, presents a future opportunity if Etsy can improve its margins and scale the business effectively. The potential for Depop to generate substantial capital through a sale could support further buybacks and investments, but this remains speculative at this point.
Devnani covers the Consumer Cyclical sector, focusing on stocks such as Wayfair, eBay, and Etsy. According to TipRanks, Devnani has an average return of 22.6% and an 80.39% success rate on recommended stocks.
In another report released yesterday, Stifel Nicolaus also maintained a Hold rating on the stock with a $45.00 price target.