Tuesday, Bernstein SocGen Group maintained its Market Perform rating on Etsy shares (NASDAQ:ETSY) with a steady price target of $55.00. Analysts observed that Etsy shares have significantly underperformed compared to the S&P 500, having declined by 64% since early February 2023, while the broader market index has risen by 45% during the same period.
This stark contrast has been attributed to the e-commerce platform's post-pandemic performance and challenges in growing its Gross Merchandise Sales (GMS). Despite these challenges, InvestingPro data reveals impressive fundamentals, including a robust gross profit margin of 71.16% and a solid financial health score. Subscribers can access 8 additional ProTips and comprehensive analysis through the Pro Research Report.
Etsy's strategic decision to redirect staff efforts away from immediate GMS growth to other initiatives was estimated to cost the company several percentage points in growth. However, these initiatives are expected to create favorable year-over-year comparisons and potentially boost GMS trends starting in 2025.
Despite these potential tailwinds, analysts expressed caution, citing the need for clearer signs of improvement in GMS. Etsy's third-quarter results showed a 6% year-over-year decline in core GMS, and the company provided soft guidance for the fourth quarter.
Recent InvestingPro data shows moderate revenue growth of 3.14% over the last twelve months, with the stock trading at a P/E ratio of 24.32. Moreover, alternative real-time data on Etsy's performance has presented a mixed picture. The current sell-side GMS estimates may be overly optimistic and could require adjustments.
The discussion on Etsy's long-term growth potential remains open, with the company needing to increase order frequency among its large user base, especially as the contribution from new buyers dwindles. Etsy is poised to benefit most from a change in market perception within the coverage scope, making its future growth trajectory a topic of interest among investors and analysts alike.
In other recent news, Etsy, a global online marketplace, has been the subject of a variety of recent developments. Etsy's Gross Merchandise Sales (GMS) growth and earnings before interest, taxes, depreciation, and amortization (EBITDA) have prompted Bernstein analysts to adjust their outlook on the company's shares. The company's price target has been reduced from $60.00 to $55.00, reflecting a more cautious stance on Etsy's financial performance.
In other developments, Etsy has approved a new employee stock award plan, the Etsy, Inc. 2024 Inducement Plan, aimed at attracting and retaining talent. The plan reserves 1,000,000 shares of Etsy's common stock for issuance to new employees, demonstrating the company's strategic approach to human resources.
Etsy has also made significant changes to its executive team, with Kruti Patel Goyal promoted to President and Chief Growth Officer and Lanny Baker appointed as the Chief Financial Officer. These changes aim to enhance customer experience and foster long-term growth.
Finally, the company has been the subject of various analyst assessments. Bernstein maintained its Market Perform rating on Etsy shares, while Goldman Sachs raised Etsy's price target but maintained a Sell rating. Citi also adjusted the company's price target while retaining a Neutral stance. These recent developments underscore Etsy's ongoing efforts to navigate its financial landscape and secure its market position.
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