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On Wednesday, JPMorgan analyst Bryan Smilek reaffirmed a Neutral rating on Etsy (NASDAQ:ETSY), with a steady price target of $50.00. According to InvestingPro data, Etsy currently trades at $48.53, with analysis suggesting the stock is undervalued despite its impressive 72.4% gross profit margin. Smilek provided insight into the potential effects of tariffs on the $5.2 billion market cap online marketplace, noting that Etsy’s direct exposure to tariffs from Canada, Mexico, and China is relatively small, with less than 5% of Gross Merchandise Sales (GMS) coming from U.S. buyers purchasing from these countries. The company’s strong financial position is evidenced by its healthy current ratio of 2.0, indicating sufficient liquidity to meet short-term obligations.
The analysis further highlighted that approximately 28% of Etsy’s global marketplace sellers export goods outside of their home country, including European sellers exporting to the U.S., which could be more significantly affected by broader European tariffs. Smilek suggested that Etsy could leverage domestic sales promotions to mitigate the impact of these tariffs. For deeper insights into Etsy’s financial health and growth potential, InvestingPro subscribers can access 11 additional exclusive ProTips and comprehensive valuation metrics.
The report also considered the broader e-commerce sector’s potential challenges due to tariffs, which could lead to increased product pricing as sellers and suppliers pass on additional costs to consumers. This scenario could result in demand headwinds for Etsy, possibly affecting the growth of onsite advertising, such as Etsy Ads.
JPMorgan’s price target for Etsy is based on an estimated 10 times the forecasted 2026 Free Cash Flow (FCF) of $750 million. The firm’s stance remains neutral, reflecting caution over the potential impact of tariffs on Etsy’s GMS and advertising revenue, despite the company’s limited direct exposure.
In other recent news, Etsy has announced the appointment of Rafe Colburn as its new Chief Technology Officer, effective May 5, 2025. Colburn returns to Etsy after a decade, having previously held a leadership position at Depop. Meanwhile, analyst firms have been adjusting their outlooks on Etsy’s stock. Loop Capital Markets reiterated its Sell rating with a reduced price target of $40, citing concerns over a decline in Gross Merchandise Sales (GMS) and a lack of indicators for a reversal. Cantor Fitzgerald also lowered its price target to $43, maintaining a Neutral rating due to uncertainties in Etsy’s fundamental outlook for 2025. Guggenheim, while maintaining a Buy rating, adjusted its price target down to $70, acknowledging a shortfall in GMS but noting positive factors such as improved take rates and cost of revenue leverage. These developments come as Etsy navigates a competitive and evolving market landscape.
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