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On Wednesday, Evercore ISI analyst Mark Mahaney adjusted the price target for Etsy (NASDAQ:ETSY) shares, reducing it to $60 from the previous $65 while maintaining an Outperform rating on the company. The stock, currently trading at $51.53, has shown significant volatility with a 52-week range of $47.10 to $78.65. According to InvestingPro analysis, Etsy appears undervalued based on its Fair Value calculations. This revision follows Etsy’s fourth-quarter performance, which Mahaney described as mixed and lower than expected. The company’s Gross Merchandise Sales (GMS) for the quarter fell short of Wall Street’s expectations by 3%, but a stronger-than-anticipated take rate, bolstered by the robust performance of Etsy Ads, resulted in a Revenue shortfall of just 1%. Additionally, EBITDA surpassed analyst predictions by 2%. InvestingPro data reveals impressive gross profit margins of 71.16% and strong cash flows that adequately cover interest payments. Get access to 8 more exclusive ProTips and comprehensive financial analysis with an InvestingPro subscription.
Mahaney noted that for the first quarter, GMS trends are anticipated to mirror the 7% year-over-year decline seen in the fourth quarter, factoring in foreign exchange and Leap Day headwinds, slightly offset by a modest tailwind due to an earlier Easter. Despite expecting some improvement in trends beyond the first quarter, Mahaney expressed skepticism that Etsy would return to year-over-year GMS growth by the end of 2025, citing macroeconomic factors, category challenges, and competitive pressures.
The analyst remains confident in Etsy’s management and their turnaround strategy, which he finds convincing, feasible, and well-implemented. Mahaney believes that if Etsy can achieve even a modest acceleration in positive GMS growth in 2026, investors stand to be rewarded. Despite the lowered price target, the Outperform rating suggests that Evercore ISI still sees potential in Etsy’s stock for future growth.
In other recent news, Etsy has reported its fourth-quarter earnings for 2024, revealing a decline in Gross Merchandise Sales (GMS) of 6.8%, which fell short of market expectations. Revenue growth was modest at 1.2%, slightly below projections from analysts such as Raymond (NSE:RYMD) James. Etsy has also provided guidance for the first quarter of 2025, indicating a continued decline in GMS at a similar rate. Despite these challenges, Etsy’s EBITDA margins have outperformed expectations, with a notable improvement attributed to increased gross margins.
Analysts have responded by adjusting their price targets for Etsy. BTIG lowered its target to $60, while maintaining a Buy rating, citing the company’s strategic resource allocation as a factor impacting GMS growth. Truist Securities also reduced its target to $62, maintaining a Buy rating and highlighting Etsy’s increased take rate and potential for growth in profit margins. Canaccord Genuity decreased its target to $76, continuing to endorse a Buy rating, and noted Etsy’s strategic initiatives aimed at improving GMS trends throughout 2025.
Citi, meanwhile, raised its price target slightly to $56, maintaining a Neutral rating. The firm expressed cautious optimism, monitoring Etsy’s GMS trends and recent policy changes. Etsy’s management has acknowledged challenges, including reduced discretionary spending and a competitive holiday season, but has redirected resources towards growth projects to improve performance in the coming quarters.
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