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Etsy
shares were surging early Thursday after the online marketplace reported better-than-expected quarterly revenue and earnings despite a challenging environment.
Etsy
(ticker: ETSY) said late Wednesday that its second-quarter earnings were 51 cents a share, surpassing consensus expectations of 32 cents among analysts tracked by FactSet. Sales of $585 million also beat estimates of $556 million in the quarter that ended in June. Etsy had forecast sales of $540 million to $590 million.
Shares surged 9.9% to $104.92 on Thursday.
BTIG analyst Marvin Fong reiterated a Buy rating on the stock, saying he believes shares are undervalued at current levels. He lifted his target for the price to $122 from $105.
KeyBanc analyst Noah Zatzkin rates the stock at Sector Weight. He said that while Etsy’s ability to deliver on its business plans is impressive in the current environment, “we continue to favor companies with greater exposure to higher-end consumer” and ones that offer in-person events and activities.
For the current quarter, Etsy said gross merchandise sales are expected to be $2.8 billion to $3 billion. That is slightly lower than analysts’ forecast of $3.08 billion. Management expects revenue to be $540 million to $575 million, while the consensus call on Wall Street is for $568 million.
Expectations that a recession is on the way and a slowdown in discretionary spending have prompted at least two analysts to cut their ratings or price targets on the stock recently.
Needham analyst Anna Andreeva reduced her rating on the handicrafts marketplace to Hold from Buy late last month while Oppenheimer’s analyst Jason Helfstei cut his price target to $120 from $140.
Etsy CEO Josh Silverman acknowledged the effects of worsening economic conditions several times during a conference call held to discuss the earnings, but also presented the company’s efforts to limit the damage.
He highlighted campaigns that remind users about the value and affordability of Etsy, as well as enhancements to Reverb, Etsy’s musical instrument marketplace, that are intended to help people track the value of equipment over time.
Corrections & Amplifications: KeyBanc analyst Noah Zatzkin rates Etsy stock at Sector Weight. An earlier version of this article incorrectly said the rating was Underweight.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com
Read More: Etsy Posts Strong Results Despite Worries Over Consumer Spending