Why This Etsy Analyst Expects Q4 Earnings Beat This Week

Etsy Inc ETSY is off to a strong start to 2023, and one analyst said investors can expect some positive fourth-quarter numbers from the company on Wednesday.

The Analyst: On Monday, Bank of America analyst Curtis Nagle reiterated a Neutral rating and $145 price target for Etsy.

The Thesis: While Nagle is cautious on Etsy shares, he projects the company will beat consensus earnings expectations by about 5% this week. Nagle has also raised his 2023 EPS estimate for Etsy from $3.95 to $3.97 and his 2023 revenue estimate from $2.722 billion to $2.735 billion.

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Even if Etsy beats earnings expectations this week, Nagle said the company still faces significant headwinds in 2023.

"Etsy has a history of guiding conservatively but beating numbers (four of past seven qtrs.), 2/3-year comparisons remain difficult until late March 1Q (based on ETSY web traffic) and overall US eComm trends decelerated in January," he said.

Nagle said investors will be most focused on quarterly buyer growth, gross merchandise sales growth catalysts, advertising performance and non-Etsy marketplace trends.

Nagle is projecting revenue growth will slow to just 7.3% in 2023 and EPS will decline by 3.9% before both metrics rebound in 2024. Yet he said the stock's valuation upside may be limited until it demonstrates those growth numbers are back on the right track.

Etsy reports fourth-quarter numbers on Wednesday afternoon. Analysts are expecting EPS of 82 cents on revenue of $750.6 million.

Benzinga's Take: Etsy has a high-margin business that is differentiated from other e-commerce platforms and is consistently profitable. Investors likely need to see growth acceleration on both the top and bottom lines before the stock can make a significant move higher.

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