Is the rebound off its recent lows a sign that more gains are ahead for Etsy's investors?
Stifel analyst Scott Devitt reiterated his buy rating on Etsy's stock following its fourth-quarter report. Although he cut his share price forecast from $230 to $200, his new estimate is still 34% higher than Etsy's current price near $149. Despite Etsy's conservative revenue guidance for the first quarter of 2022, Devitt is encouraged by the strong growth in new buyers on its platform.
BTIG analyst Marvin Fong also maintained his buy rating on Etsy. He likewise cut his target price, from $230 to $195, as he believes the stock will command a lower price-to-earnings ratio due to its lower projected growth rates. Yet he expects Etsy's upcoming fee increases to boost its ability to cash in on its massive market opportunity.
Meanwhile, Wedbush analyst Ygal Arounian repeated his outperform rating on Etsy's shares. He now sees its stock price rising to $185, down from his prior estimate of $250, due to macroeconomic factors (such as higher shipping costs) that are weighing on the e-commerce industry.
So, is Etsy a Buy?
Despite multiple price target reductions, Wall Street remains bullish on Etsy. It's not difficult to see why. Etsy has an enormous addressable market, one that some analysts peg as high as $2 trillion.
Moreover, Etsy's gross merchandise sales -- essentially, the total dollar value of sales generated by merchants on its marketplaces -- jumped 31% in 2021, while its revenue soared 35%. This shows that Etsy is finding new ways to monetize its platform. A seller transaction fee increase set to go into effect in April should further this trend.
With so much growth still ahead, Etsy's stock looks like a solid long-term buy today.