In a report released today, Nathan Feather from Morgan Stanley reiterated a Sell rating on Etsy (ETSY – Research Report), with a price target of $44.00.
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Nathan Feather’s rating is based on several factors, primarily centered around the underperformance in Etsy’s gross merchandise sales (GMS) and concerns over buyer retention. In the fourth quarter, Etsy’s GMS decreased by 9% year-over-year, which was below expectations. This decline was mainly due to a drop in GMS per buyer and a decrease in net new additions, which hit a record low.
The report highlights that despite a slight improvement in profit margins, the company’s guidance for the first quarter did not indicate any significant acceleration in GMS growth. Additionally, the weakening metrics related to buyers and cohorts, including increased customer acquisition costs and reduced new buyer retention, have raised doubts about Etsy’s ability to sustain long-term growth and expand margins. Therefore, Nathan Feather remains skeptical about Etsy’s capacity to improve its financial metrics in the near future, maintaining a Sell rating with a price target of $44.
In another report released yesterday, Wells Fargo also maintained a Sell rating on the stock with a $47.00 price target.