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On Thursday, Truist Securities adjusted its outlook on Etsy (NASDAQ:ETSY) shares by reducing the price target from $62.00 to $55.00, while sustaining a Buy rating on the stock. The stock, currently trading at $44.04, has experienced a sharp 9% decline over the past week. According to InvestingPro analysis, Etsy appears undervalued compared to its Fair Value, with analyst targets ranging from $40 to $92.45. The move comes in response to the United States' recent implementation of a 125% tariff on imports from China, which may be followed by additional tariffs on other trading partners within the next 90 days.
Truist Securities notes that Etsy's direct exposure to Chinese sellers is in the low single-digit percentage of its Gross Merchandise Sales (GMS), and its indirect exposure—through non-Chinese sellers who purchase supplies from China—is somewhat higher. Despite the adjustments to Etsy's estimates and price target, Truist Securities remains positive on the company's long-term prospects.
The firm believes that the removal of the de minimis exemption for Chinese imports could ultimately benefit Etsy. The exemption previously allowed small-value shipments to enter the U.S. without being subject to duties. Truist Securities also sees the potential imposition of only a 10% tariff on other trading partners as an opportunity for Etsy to emphasize product substitution on its marketplace.
The analyst from Truist Securities stated, "We're lowering our ests/PT for ETSY following the US's imposition of 125% tariff on China (with more tariffs potentially hitting other trading partners within 90 days). While this remains a fluid situation, we estimate Etsy's direct exposure to Chinese sellers in the LSD % of GMS and its indirect exposure (non-Chinese sellers acquiring supplies from China) to be somewhat higher."
The analyst further added, "That said, we remain constructive LT as we view the elimination of the de minimis exemption for Chinese imports as a net positive, and the potential for 'only' 10% tariff on other trading partners as a way to highlight substitution on the Etsy marketplace."
Etsy's stock performance and future outlook will continue to be monitored closely by investors as the situation with international trade tariffs evolves. For deeper insights into Etsy's financial health and growth prospects, InvestingPro subscribers can access comprehensive analysis, including 12 additional ProTips and detailed valuation metrics in the Pro Research Report, helping investors make more informed decisions during this period of market uncertainty.
In other recent news, Etsy has faced several analyst adjustments and company developments. JPMorgan analyst Bryan Smilek revised Etsy's price target to $42 from $50 while maintaining a Neutral rating, citing limited exposure to tariffs from Canada, Mexico, and China, but noting challenges from European tariffs. Smilek also projected a decline in Etsy's Consolidated Gross Merchandise Sales (GMS) by approximately 4% in 2025, with adjusted EBITDA margins expected to decrease. Meanwhile, Loop Capital reiterated a Sell rating with a $40 price target, highlighting concerns over declining GMS and a slowdown in new buyer acquisition.
Cantor Fitzgerald also adjusted its price target for Etsy, lowering it to $43 from $46, while maintaining a Neutral rating. The firm noted that Etsy's fourth-quarter GMS missed expectations, though EBITDA exceeded estimates, and expressed concerns over the company's near-term prospects. In corporate developments, Etsy appointed Rafe Colburn as its new Chief Technology Officer, effective May 5, 2025. Colburn, returning to Etsy after a decade, aims to leverage AI and other technologies to enhance the shopping experience and create more opportunities for sellers.
These recent developments reflect the challenges and strategic changes Etsy is navigating in a competitive market environment.
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