John Penney
Bank of America started off coverage on Etsy (NASDAQ:ETSY) with a Neutral rating,
Etsy (ETSY) is given credit for building a high margin and differentiated marketplace that is seen having strong competitive barriers given that is does not directly compete with larger retailers and marketplaces.
While BofA believe that Etsy (ETSY) can return to high single-digit revenue growth in mid-2023 as compares ease and relative market share remains low, there is caution exuded about the near-to-medium term due to a high macro risk that could cut into consumer demand.
Analyst Curtis Nagle: “We expect GMS to return to growth in 2Q22 but high inflation, low consumer confidence and 1H22 recession risk make visibility low. Other risks include: 1) scaling into underpenetrated categories, customer demographics and regions could take longer and cost more than the Street anticipates; 2) FX risk as Etsy does not hedge and 43% of GMS is int’l and: 3) acquired marketplaces have not produced growth and operate in competitive and/or unprofitable markets.”
The firm’s price objective of $120 on ETSY is based on a 22X multiple of the 2023 EV/EBITDA estimate, which is noted to be a discount to Etsy’s (ETSY) five-year average of 28X.
Shares of Etsy (ETSY) rose 0.90% in premarket trading to $112.79.
The Seeking Alpha Quant Rating on ETSY is flashing Hold.
Source: seekingalpha.com
