Etsy stock lacks a meaningful upside: Citigroup

October 25, 2023 12:22 PM PDT | By Invezz

Etsy stock lacks a meaningful upside: Citigroup — Image source: Invezz

Etsy stock downgraded to ‘neutral’

Arounian downgraded the eCommerce company this morning to “neutral” and lowered his price objective to $67 which doesn’t represent a material upside on its previous close.

The analyst turned dovish on Etsy stock primarily because the Nasdaq-listed firm lacks visibility in terms of gross merchandise sales growth. His research note reads:

We see too many headwinds that could pressure discretionary spend and Etsy’s opportunity to return to double-digit growth.

Etsy is slated to report its Q3 financial results on November 1^st. Consensus is for it to earn 50 cents a share this quarter versus 58 cents per share a year ago.

Watch here: https://www.youtube.com/embed/E_ALdGYFcb4?feature=oembed

Etsy could gain share over the long term

Ygal Arounian agreed that the online retailer could gain market share in the long run. But the rising competition and limited take-rate upside will remain a headwind in the near term, he added.

A new FTI Consulting report predicts that U.S. online #retail sales will reach $1.14 trillion this year, up 10%. FTI Consulting’s 2023 U.S. Online Retail Report projects that nearly half (42%) of retail sales growth this year will be #ecommerce https://t.co/DnKE9UF4Re pic.twitter.com/yM5APjD5sC

— Brian Schoenbaechler (@bschoenbaechler) July 28, 2023

The Citi analyst downgraded Etsy stock today also because the student loan payments could further weigh on discretionary spending moving forward.

Finally, a “greater promotional environment” will likely stand in its way and make it more challenging for the company to return to a solid revenue growth, as per Ygal Arounian.

Also on Wednesday, Etsy partnered with Payoneer – a New York based financial technology company to make getting paid more easier for its sellers in emerging markets.

The post Etsy stock lacks a meaningful upside: Citigroup appeared first on Invezz

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