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On Thursday, Bernstein analysts reduced their price target for Etsy (NASDAQ:ETSY) shares from $50.00 to $45.00, while keeping a "Market Perform" rating on the company. According to InvestingPro data, the stock has fallen significantly over the last three months, with a year-to-date decline of nearly 18%. The revision follows Etsy’s first-quarter results, which did not significantly alter the ongoing discussions around the company’s performance. Gross Merchandise Sales (GMS) continued to show weakness, a trend consistent with the fourth quarter and the first-quarter guidance, which was slightly softer on a constant currency basis.
Analysts noted that Etsy has minimal direct exposure to China tariffs, which could potentially become advantageous for the company later in the year. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 2.14, indicating liquid assets exceed short-term obligations. This aspect is being closely monitored, especially as the fourth quarter approaches and the situation with industry inventory levels becomes clearer.
The firm expressed appreciation for Etsy’s focus on data-driven improvements to its search and recommendation engine. These enhancements are seen as necessary for increasing user engagement and reigniting GMS growth. InvestingPro data reveals impressive gross profit margins of 72.3%, though the analysts emphasized that the company is not yet at a point where these key performance indicators (KPIs) are showing the desired upward momentum, with core KPIs still facing pressure and lacking tangible evidence of improvement in the reported figures.
The analyst’s commentary highlighted that while Etsy’s strategic initiatives are recognized, the actual results have yet to reflect the anticipated benefits. The current stance remains cautious as the company continues to navigate through its challenges with the hope of achieving growth in GMS and other critical metrics. According to InvestingPro, which offers comprehensive analysis of over 1,400 stocks, Etsy maintains profitability with positive earnings over the last twelve months, despite current challenges.
In other recent news, Etsy Inc . reported its first-quarter 2025 earnings, which showed a significant shortfall in earnings per share (EPS). The company posted an EPS of -$0.49, contrasting sharply with the forecasted $0.47. Despite this, Etsy managed to surpass revenue expectations slightly, recording $651.2 million against a forecast of $642.03 million. Additionally, Etsy’s Gross Merchandise Sales (GMS) for the quarter met expectations, although there was a 6.5% decline year-over-year to $2.8 billion.
The company also announced the divestment of its Reverb marketplace for $105 million, a move aimed at focusing on its core operations. In response to the earnings report, Goldman Sachs analyst Eric Sheridan lowered Etsy’s stock price target from $35 to $31, maintaining a Sell rating. Sheridan noted challenges in the eCommerce sector and potential obstacles due to competitive pressures. Furthermore, Etsy is increasing its investment in paid social marketing, which has shown growth in its marketplace GMS. The company is also seeing positive results from personalized emails and push notifications, despite cost headwinds from cloud-related expenses and its loyalty program.
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