JMP Securities recommends that investors consider Etsy as a stock to buy, since the stock may see significant gains in the future. Nicholas Jones, an analyst covering Etsy, gave the stock a market-outperform rating. He stated in a Wednesday report that Etsy is seeing more repeat customers during this pandemic. Jones stated that “ETSY’s platform was one of the best performers during and after the pandemic.” Its brand awareness has increased in the long-term, rather than being temporary. We believe that ETSY can continue to drive GMV growth by further improving brand awareness, geographical expansion and investing in technology. JMP set a $125 price target, 54% more than Tuesday’s closing shares. Due to rising inflationary pressures, and possible recessions that could affect Etsy or its competitors, the firm expects e-commerce to face challenges. Analysts predict that consumers will be spending more money on experiences and travel in the short term than they do on online goods. However, Etsy’s entry into a large sector has a high total market. This is especially true as custom-made goods become more popular. JMP has estimated that Etsy would control approximately 8% in a market worth $300 billion by 2025. Although JMP’s TAM estimates for Etsy are less than Etsy, the analysts believe that Etsy has “plenty runway” to increase its share. Jones explained that ETSY was structurally benefiting due to pandemics. It is going from being less top-of mind to becoming one of the top E-commerce platforms. Although the immediate impact of pandemics may be less, consumers will continue to spend more money on offline and travel, so we expect ETSY’s ability to convert active buyers into repeat buyers in the medium-term. —CNBC’s Michael Bloom contributed to this report.
