Etsy Soars Higher After Q2 Report, But Analyst Opinions Remain Mixed

Etsy Inc ETSY shares are soaring after a second-quarter earnings and sales beat Monday that also saw the company raise its 2018 guidance. Here's how three analysts reacted. 

Stifel 

Etsy has "a bounce in its step," said Stifel analyst Scott Devitt. He maintained a Hold rating on Etsy and raised the price target from $37 to $46 in a Tuesday note. 

“Etsy has a number of initiatives and platform/product enhancements to drive higher levels of growth following the successful reinvigoration in GMS over the last year,” the analyst said. 

In addition to its performance marketing spend, up 40 percent year-over-year to $110 million, Devitt said Etsy is testing brand marketing through offline and TV advertising.

Morgan Stanley 

Morgan Stanley analyst Brian Nowak was less confident after the print, calling the stock expensive relative to industry peers. The analyst maintained an Underweight rating with a $36 price target.

“Etsy’s product enhancements continue to benefit the platform and drive growth as shown by a beat-and-raise quarter. However, we continue to struggle with the long-term potential, particularly as valuation implies the stock is pricing in better results over the long-term,” Nowak said. 

Morgan Stanley's model for the equity is under review, the analyst said. 

DA Davidson 

Etsy’s Q2 had D.A. Davidson analyst Tom Forte jumping for joy, and he was not stingy with adjectives, calling the quarter "excellent," "tremendous," "sensational" and "enthusiastically" reiterating a Buy rating while increasing the price target from $51 to $53.

“We have even more confidence in management’s ability to drive upside from here by executing and, while still digesting the implications of its new subscription plans (announced concurrently with the price increase), we are starting to believe it could result in upside to our long-term adjusted EBITDA margin forecast of 33-percent," the analyst said. 

The thesis is that Etsy's margins will not be restricted by its mix of high-margin marketplace sales versus low-margin payment efforts, and a growing share will come from subscription revenue, Forte said. 

Etsy shares were trading up nearly 4 percent at $44.12 at the time of publication Tuesday. 

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Photo courtesy of Etsy.