Bernstein SocGen Group maintains Etsy stock rating at Market Perform

On Monday, Bernstein SocGen Group analysts reiterated a Market Perform rating for Etsy stock (NASDAQ: NASDAQ:ETSY) and maintained a price target of $45.00, despite the stock’s impressive 16% surge over the past week. According to InvestingPro analysis, Etsy appears undervalued at current levels, with analyst targets ranging from $31 to $92. The decision follows a discussion with Etsy’s CEO, Josh Silverman, and CFO, Lanny Baker, during the Strategic Decisions Conference in New York.

The conversation focused on Etsy’s strategy for returning to growth, which includes enhancing product discoverability, personalization, and transitioning to a more app-based platform. With an impressive gross profit margin of 72.3% and strong financial health score rated as GREAT by InvestingPro, Etsy is shifting its product teams from optimizing for incremental Gross Merchandise Sales to a holistic approach aimed at improving customer lifetime value.

Analysts noted that these strategies are necessary for increasing purchase frequency but acknowledged the challenges involved. They are looking for evidence of the strategies’ effectiveness before making further assessments.

Additionally, the discussion covered macroeconomic factors, search traffic, and profit margins. A key initiative highlighted was Etsy’s plan to systematically collect and utilize more data and signals for search and customer engagement.

Etsy is evolving its shopping experience, particularly on its app, to enhance discovery and data collection. The company aims to improve its recommendation engine, which has traditionally relied on past purchases, to better facilitate product discovery.

In other recent news, Etsy’s first-quarter earnings report has been a focal point for several analysts, leading to adjustments in their price targets for the company. Canaccord Genuity reduced its price target for Etsy to $62, maintaining a Buy rating, citing a mix of achievements and challenges in the earnings report. Etsy exceeded expectations in active buyers and revenue but faced a decline in Gross Merchandise Sales (GMS). Meanwhile, BofA Securities also lowered its price target to $48, retaining a Neutral rating, noting a 6.5% year-over-year decrease in Total (EPA:TTEF) GMS, though sales slightly surpassed projections. The company’s gross margin fell, but efficiencies in R&D and G&A expenses helped achieve a higher-than-expected EBITDA margin.

Bernstein cut its price target to $45, maintaining a Market Perform rating, with analysts observing ongoing GMS weakness but recognizing Etsy’s minimal exposure to China tariffs as a potential advantage. Needham adjusted its price target to $55 while reiterating a Buy rating, highlighting Etsy’s growth initiatives amid economic uncertainty. Finally, Goldman Sachs reduced its price target to $31, maintaining a Sell rating, expressing concerns over macroeconomic challenges and competitive pressures. These recent developments reflect varied analyst perspectives on Etsy’s financial performance and strategic direction.

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