By Senad Karaahmetovic
Guggenheim assumed research coverage of Etsy (NASDAQ:ETSY) with a Buy rating and a $125 per share price target, up from the prior $110.
The key pillar of their positive stance on Etsy is that the implied CAGR remains well-above management's historical target range (16-20%). They add that the latest data implies a low-to-mid single-digit year-over-year decline, which is better than the management-implied mid-to-high single-digit decline.
“As a result, our 3Q GMS forecast sits near the high-end of management's initial outlook,” analysts there said in a client note.
Moreover, the analysts are positive about the increase in the number of listings, which is “encouraging.” They highlight three key points in this area.
Total listings are up ~6% from the beginning of 2022 (surpassing ~107 million unique items) — and over 500 basis points of year-to-date listing growth occurred during the 3Q (ahead of Holiday 2022);
If the average number of listings per active seller on Etsy.com were to hold constant, this would also imply meaningful active seller growth during the 3Q; and
Listing growth is broad-based, with 13 out of the 15 product categories up year-to-date—with an average listing growth rate of ~7.5%.
“We see significant out-year growth potential and upside to management's 30%-plus adjusted EBITDA margin target,” the analysts concluded.
Etsy shares are down almost 1% today.