Etsy (ETSY) Soars 9% After Crushing Estimates and Issuing Strong Guidance, Analysts Impressed and Raise PTs

February 26, 2021 8:25 AM EST
Get Alerts ETSY Hot Sheet
Price: $218.07 -2.66%

Rating Summary:
    20 Buy, 3 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 18 | Down: 8 | New: 31
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Etsy (NASDAQ: ETSY) smashed analysts' estimates for earnings and revenue in the fourth quarter. The company made a profit of $1.08 per share, which is nearly double the $0.59 expected from analysts. Revenue came in at $617.4 million, again easily higher than $516 million the Street expected.

Shares of the company are up more than 9% in Friday pre-open.

For the current quarter, the e-commerce company expects revenue between $513 million and $536 million to smash the $383 million expected from analysts. Due to Covid-19 pandemic, the company declined to give guidance for the full year of 2021.

"Exceptional fourth quarter performance, with consolidated GMS and revenue growth of approximately 118% and 129% respectively, capped off a transformative year for Etsy," said Josh Silverman, Etsy, Inc. Chief Executive Officer.

"2020 was an inflection point in history for e-commerce and for Etsy, with millions of buyers choosing us for their everyday needs as we lived up to our mission to 'Keep Commerce Human.' We are particularly gratified that circumstance met preparedness, highlighting the agility of our team and the power of our differentiated strategy."

Goldman Sachs analyst Heath Terry praised outperformance recorded across all metrics. He significantly raised the price target to $286.00 per share from $178.00 per share on higher estimates.

“As Etsy continues to capitalize on significant opportunity in the surge in eCommerce adoption (see eCommerce’s Steepening Curve) as traditional retail remains less attractive to consumers and Etsy creators adapt to rapidly evolving consumer needs, we continue to see considerable upside to consensus estimates over the course of 2021 and beyond as Etsy drives incremental buyer frequency through investments in personalization, search and marketing, and generates leverage across its cost structure,” Terry wrote in a note.

Etsy has a lot of dry powder to fuel its long-term growth, says Needham analyst Rick Patel in a memo sent to clients today. He also raised the PT to $235.00 from $155.00 on a Buy-rated ETSY.

“ETSY beat 4Q20 expectations across GMS, sales, and margins. What we like: 1) Despite concerns of a vaccine hindering ecommerce growth, Etsy’s strength has continued in ’21 and 1Q21 GMS is planned +115% to +125%; 2) 4Q results acceleration (excl. mask sales), giving credibility to Etsy as a mainstream platform with a $1.7bn TAM; 3) we expect growth in repeat and habitual buyers as search experience, personalization, and marketing make further progress to drive platform loyalty; and 4) Offsite Ads and services continue to make strong progress, helping drive a higher take rate and margins. The knock is tough y/y comparisons and headwinds from mask sales in 2020 (we detail the math below for our ’21 GMS forecast),” he said.

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