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On Thursday, Loop Capital Markets adjusted its outlook on Etsy (NASDAQ:ETSY) shares, reducing the price target to $40 from the previous $45 while sustaining a Sell rating on the stock. According to InvestingPro analysis, Etsy appears undervalued at its current price of $51.53, despite maintaining impressive gross margins of 72.4%. Analyst Laura Champine at Loop Capital cited concerns over the ongoing decline in Gross Merchandise Sales (GMS) and a lack of clear indicators for a potential reversal.
Champine pointed out that the deceleration in GMS had become more pronounced in the fourth quarter, prompting a revision of both near- and longer-term GMS projections. According to the analyst, the revised GMS estimate for the current year is now at a 5% decrease, which is a shift from the earlier forecast of a flat performance.
The financial outlook for Etsy was further adjusted, with the adjusted EBITDA estimate for 2025 now standing $14 million below the consensus. Additionally, the sales estimate for the same year has been revised downward by $124 million in comparison to the consensus.
The analyst’s report also mentioned Etsy’s recent executive change, noting the appointment of Lanny Baker as the new Chief Financial Officer. Champine highlighted that Baker has significantly less experience in e-commerce compared to the outgoing CFO, Rachel Glaser, which could be a factor in the firm’s cautious stance on the company’s financial prospects.
Etsy, an online marketplace known for its focus on handmade and vintage items, has been facing challenges as the e-commerce sector evolves and competition intensifies. The updated analysis from Loop Capital reflects these ongoing industry dynamics and the specific hurdles that Etsy is currently grappling with.
In other recent news, Etsy reported a challenging fourth quarter with a notable decline in Gross Merchandise Sales (GMS) and revenue, missing expectations. Analysts from Raymond (NSE:RYMD) James, Evercore ISI, and BTIG all adjusted their price targets for Etsy to $60, citing mixed performance and lower-than-expected results. Despite the disappointing earnings, Etsy’s adjusted EBITDA margins exceeded expectations, supported by a strong gross margin. Goldman Sachs maintained a Sell rating with a $45 target, pointing out the nearly 7% year-over-year decline in consolidated GMS. Analysts from Stifel also lowered their price target to $51 while keeping a Hold rating, noting the company’s focus on short-term GMS growth. Etsy’s management expects improved margins in the latter half of 2025, although first-quarter guidance suggests continued GMS declines. The company plans to shift its product development focus back to conversion, potentially impacting future GMS positively. Despite the challenges, some analysts see potential for Etsy’s stock, with Evercore ISI maintaining an Outperform rating, and BTIG keeping a Buy rating, suggesting a favorable risk-reward profile.
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