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Investing.com - JPMorgan has raised its price target on Etsy (NASDAQ:ETSY) to $53.00 from $50.00 while maintaining a Neutral rating ahead of the company’s second-quarter earnings report scheduled for Wednesday, July 30. Currently trading at $60.41 with a P/E ratio of 35.65, InvestingPro analysis suggests the stock is undervalued, with additional insights available through their comprehensive Pro Research Report.
The firm notes that Etsy has recalibrated its product teams’ focus, with approximately 33% of the engineering team focused on near-term gross merchandise sales conversions while about 67% are driving medium to long-term product optimizations, which should support improved GMS trends. This strategic focus appears to be paying off, as InvestingPro data shows impressive gross profit margins of 72.3% and strong recent performance, with the stock gaining 8.48% in the past week.
JPMorgan observes that app trends continue to improve, driven by better discovery, relevancy, personalization, and algorithmic curation, with Sensor Tower data suggesting second-quarter global monthly active user growth of 12% year-over-year compared to 6% in the first quarter, and global download growth of 12% year-over-year versus 2% in the first quarter. The company’s strong operational execution is reflected in its GREAT financial health score from InvestingPro, which evaluates multiple financial metrics.
SimilarWeb (NYSE:SMWB) data indicates second-quarter global website visits declined 6% year-over-year, an improvement from the 8% decline in the first quarter, while global unique visitors fell 4% year-over-year compared to a 6% drop in the previous quarter.
The firm believes Etsy may be winning more share of product listing ads and marketing auctions, though cost-per-click likely remains unchanged, amid reports that Amazon (NASDAQ:AMZN) pulled Google (NASDAQ:GOOGL) advertising spend in the second quarter while competitors like Temu resumed U.S. ad spending across Meta (NASDAQ:META) and Google after significant pauses.
In other recent news, Etsy announced the pricing of $650 million in convertible senior notes due in 2030, carrying a 1.00% interest rate. This offering was made in a private placement to qualified institutional buyers, with an option for initial purchasers to acquire an additional $50 million in notes. Truist Securities raised its price target for Etsy to $60, citing positive growth data and noting that Etsy’s Marketplace revenue is tracking ahead of consensus estimates. UBS also increased its price target for Etsy from $45 to $62, maintaining a Neutral rating due to improved growth expectations for fiscal year 2025. Morgan Stanley (NYSE:MS) upgraded Etsy’s stock rating from Underweight to Equalweight, adjusting its price target to $50 based on valuation considerations. Meanwhile, Citizens JMP reiterated its Market Perform rating on Etsy, pointing to ongoing competitive pressures in the retail space. These developments reflect a range of analyst perspectives on Etsy’s financial outlook and strategic positioning in the market.
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