Fannie Mae, Freddie Mac shares tumble after conservatorship comments
Investing.com -- JP Morgan initiated coverage of Etsy Inc (NASDAQ:ETSY) with a Neutral rating and a price target of $50 on strong fundamentals but ongoing macro pressures and the need for consistent execution to drive improved performance.
Etsy is a leading online marketplace for unique and creative goods, but macro headwinds and a competitive retail environment have weighed on merchandise sales, the analysts say.
Sales declined 4.5% year-over-year in 2024, with JP Morgan projecting a further 3.7% FXN decline in 2025, though trends are expected to improve sequentially.
Etsy operates in a roughly $550 billion core addressable market, offering 100 million+ listings to over 95 million active buyers.
While the company is enhancing its social commerce offerings through better search, mobile apps, and increased purchase frequency, JP Morgan noted that investments in long-term growth initiatives have cost Etsy at least a few hundred million dollars in near-term sales opportunities.
JP Morgan expects Etsy’s revenue to grow at a modest 3% compound annual growth rate from 2024 to 2027, driven by take rate expansion supported by advertising and seller enhancements.
For 2025, the firm forecasts revenue of $2.8 billion, up 0.5% year-over-year, with a projected take rate of 23.3%.
Despite maintaining a 27.8% adjusted EBITDA margin in 2024, Etsy’s ongoing investments may weigh on profitability in 2025. JP Morgan projects a 27.3% adjusted EBITDA margin for 2025 and free cash flow of $718.6 million, reflecting a 93% EBITDA-to-FCF conversion.
The $50 price target is based on about 10x 2026E FCF of $750 million, reflecting a discount to peers like eBay (NASDAQ:EBAY) and Chewy (NYSE:CHWY) due to Etsy’s lower projected revenue growth and higher exposure to discretionary spending.