Arete downgrades Etsy to Sell on advertising growth limitations

As previously reported, Arete analyst Oliver Lester downgraded Etsy (ETSY) to Sell from Neutral with a $43 price target The stock in premarket trading is down 3% to $60.04. Third party data suggests the company’s gross merchandise sales improved in May, potentially turning positive after two years of decline, but Etsy is becoming more reliant on marketing for sales, the analyst tells investors in a research note. In addition, the company is lapping one-off benefits and has reached the limitations of its advertising growth beyond one-time “growth hacks,” the analyst tells investors in a research note. Arete downgrades the shares following the 50% rally since April.