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Investing.com - Canaccord Genuity raised its price target on Etsy (NASDAQ:ETSY) to $76.00 from $68.00 on Wednesday, while maintaining a Buy rating following the company’s second-quarter results that exceeded analyst expectations. With the stock currently trading at $65.86 and InvestingPro data showing 4 analysts revising earnings upward, Etsy appears slightly undervalued based on Fair Value analysis.
The e-commerce platform reported better-than-anticipated gross merchandise sales (GMS), revenue, and profitability figures for the quarter. The $6.83B market cap company maintained impressive gross profit margins of 72.3%, demonstrating strong operational efficiency. While consolidated GMS declined approximately 5% year-over-year, GMS excluding Reverb decreased just 2.6% compared to a 6.2% decline in the first quarter, showing sequential improvement.
Etsy’s take rate expanded both year-over-year and quarter-over-quarter, increasing by 200 basis points and 70 basis points respectively, with Etsy Ads being the largest contributor to this growth. The core Etsy Marketplace saw trends improve throughout the quarter after a softer start impacted by Easter timing. InvestingPro analysis reveals the company maintains a GREAT financial health score, with 12 additional exclusive insights available for subscribers.
The company benefited from a more favorable competitive environment as rivals Temu and Shein reduced their U.S. advertising spending, allowing Etsy to capture a higher share of clicks in Google (NASDAQ:GOOGL) PLA markets. Strategic initiatives also yielded positive results, including optimized Google Shopping listings and increased GMS from paid social channels.
For the third quarter, Etsy provided GMS guidance modestly ahead of consensus, projecting GMS excluding Reverb to decline 1.9% year-over-year at the midpoint, while adjusted EBITDA margin guidance came in slightly below expectations, partly reflecting increased investments in Depop, which saw its GMS grow over 35% year-over-year.
In other recent news, Etsy reported its Q2 2025 earnings, showcasing a mixed financial performance. The company exceeded revenue expectations with $672.7 million, surpassing the anticipated $646.86 million. However, its earnings per share (EPS) fell short, coming in at $0.25 compared to the expected $0.48. Despite these mixed results, Etsy’s revenue beat contributed to a positive outlook from analysts. BTIG raised its price target for Etsy to $72 from $58, maintaining a Buy rating. This upgrade was influenced by improving gross merchandise sales (GMS) trends as the quarter progressed. Etsy’s third-quarter outlook indicates sequentially better year-over-year growth, even amid challenging consumer spending conditions. These developments highlight Etsy’s resilience and adaptability in the current economic climate.
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