Etsy stock lacks a meaningful upside: Citigroup

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on Oct 25, 2023
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  • Citi analyst downgraded Etsy Inc to "neutral" on Wednesday.
  • Ygal Arounian names several headwinds that could hurt Etsy.
  • Etsy stock has already been cut in more than half this year.

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Shares of Etsy Inc (NASDAQ: ETSY) are unlikely to recover meaningfully in the near term, says Ygal Arounian. He’s an analyst at Citigroup.

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Etsy stock downgraded to ‘neutral’

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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 1st. Consensus is for it to earn 50 cents a share this quarter versus 58 cents per share a year ago.

Etsy could gain share over the long term

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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.

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.

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