BTIG lowers Etsy to Neutral, says risk-reward in balance after strong rally

Investing.com -- BTIG downgraded Etsy to Neutral from Buy on Thursday, saying the stock’s rally this year has pushed shares past the firm’s price target and left risk-reward "into balance."

Shares in the e-commerce company fell 3.6% in premarket trading by 08:04 ET (12:04 GMT).

Etsy shares have climbed 55% year-to-date and 54% year-over-year, making it the best-performing stock among the 24 e-commerce names BTIG tracks, versus an average decline of 6% for the group in 2026.

The stock closed at $85.74 on Wednesday, exceeding BTIG’s prior $78 price target by roughly 10%. The broker did not set a new target, as it does not issue price targets on Neutral-rated stocks.

Analyst Marvin Fong said he believes much of the recent strength is fundamentally driven, with sales tracking solidly quarter-to-date according to third-party data, but added that "some of the outperformance, however, is attributable to non-fundamental factors such as short covering and rotation out of AI stocks."

The stock’s move comes after Etsy sold its Depop unit for $1.2 billion earlier this year, more than twice what BTIG had valued the business at, with shares rising 94% since the company’s February low. At that low, BTIG estimated the core Etsy business was trading at roughly 6 times 2027 adjusted EBITDA. The stock now trades at about 11 times that estimate, a level BTIG considers full.

The firm compared Etsy’s valuation to peers on a growth-adjusted basis, noting Amazon trades at 11 times forward EV/EBITDA while being projected to grow revenue 14% through 2028, and CarGurus trades at 9 times despite a projected 10% revenue CAGR.

In contrast, consensus estimates call for Etsy’s gross merchandise volume to grow at just a 3.6% compound annual rate through 2028. BTIG sees eBay’s valuation of 13 times forward EV/EBITDA as a ceiling for Etsy, given eBay’s faster projected revenue growth and less discretionary product mix.

The brokerage also flagged technical factors in the stock’s recent move, noting that BTIG’s chief market technician had called out Etsy among consumer discretionary names showing constructive chart patterns, with shares up 6% over the three trading days prior to the note.

It also pointed to Etsy’s $650 million in 2030 convertible notes, which carry a conversion price of $85.79 and could create resistance near current levels, though the notes’ low 1.00% yield may limit related hedging pressure.

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