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On Thursday, Canaccord Genuity analyst Maria Ripps adjusted the price target for Etsy (NASDAQ:ETSY) shares, reducing it to $62.00 from the previous $72.00, while still recommending a Buy rating on the stock. According to InvestingPro data, the stock has experienced significant volatility, with analyst targets ranging from $35.00 to $92.45, reflecting diverse market opinions. The company’s shares have declined nearly 18% year-to-date, presenting a potentially undervalued opportunity based on InvestingPro’s Fair Value analysis. The adjustment follows Etsy’s first-quarter earnings report, which presented a mix of achievements and challenges. The company surpassed consensus expectations in terms of active buyers and Gross Merchandise Sales (GMS), and also slightly exceeded forecasts for revenue and profitability.
Despite these achievements, Etsy faced headwinds, with consolidated GMS declining in the mid single-digits year-over-year and Etsy Marketplace GMS dropping approximately 9% year-over-year. Nevertheless, InvestingPro analysis shows the company maintains impressive gross profit margins of 72.3% and a healthy current ratio of 2.14, indicating strong operational efficiency and solid financial health. InvestingPro subscribers have access to 8 additional key insights about Etsy’s financial performance. The lesser decline in overall GMS was attributed to the relative strength from Depop, a subsidiary of Etsy. Etsy’s management highlighted the company’s limited direct exposure to current tariffs, which minimizes the broader impact on consumer sentiment. Notably, 90% of Etsy sellers source their supplies domestically, and the platform’s geographically diversified seller base contributes to a high buyer replacement factor during economic downturns in specific regions or countries.
Etsy is concentrating on advancing its core product and marketing initiatives amid market volatility. The company has seen a record high in app adoption, with 44.5% of Etsy Marketplace GMS in the first quarter coming from the app. Other key focuses include enhancing paid social media strategies, driving return on investment improvements, expanding the use of Gift Mode—which saw gifting GMS outperform non-gifting GMS—and re-engaging lapsed buyers, with 6.5 million reactivations in the first quarter.
Looking ahead, Etsy’s management provided a second-quarter GMS outlook that was slightly below expectations, predicting a decline similar to that of the first quarter, assuming macroeconomic conditions remain stable. However, the management team reaffirmed their confidence that the ongoing product and marketing investments will yield benefits throughout the year, potentially leading to GMS improvement and positively influencing investor sentiment. With an EBITDA of $449.31 million in the last twelve months and analysts predicting profitability this year, the company shows resilience despite market challenges. For deeper insights into Etsy’s valuation and growth potential, including exclusive financial metrics and expert analysis, visit InvestingPro, where you’ll find comprehensive research reports and real-time market intelligence.
In other recent news, Etsy reported its Q1 2025 earnings, revealing a significant miss in earnings per share (EPS) with a loss of $0.49 against a forecasted gain of $0.47. Despite this, revenue slightly exceeded expectations, reaching $651 million, a 1% increase over the previous year. The company also announced the divestment of its Reverb marketplace for $105 million, focusing its efforts on driving growth for its main platform and Depop. Analyst firms have adjusted their price targets for Etsy, with BofA Securities reducing it to $48 while maintaining a Neutral rating, and Goldman Sachs lowering it to $31 with a Sell rating. Bernstein also cut its price target to $45, maintaining a Market Perform rating. These revisions come amid Etsy’s efforts to enhance its mobile app and advertising capabilities, which have shown promising results in app-based sales. However, Etsy’s gross margin contracted due to increased costs related to machine learning and shipping, falling below expectations. The company continues to navigate macroeconomic challenges, with a focus on improving its platform and increasing user engagement.
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