The online marketplace for handmade and craft products, Etsy (NASDAQ:ETSY), will release its fourth-quarter financial results on Wednesday, February 21. While the pressure on consumer discretionary spending and heightened competitive activity could continue to hurt its performance, analysts expect ETSY’s sales to show year-over-year improvement. Further, its web traffic increased sequentially in Q4, which is positive. However, its bottom line could remain flat.
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Ahead of the earnings, Wedbush analyst Seth Basham lowered Etsy’s price target to $85 from $90. In a note to investors dated February 14, Basham said he expects the company to deliver in-line Q4 results. The analyst believes that near-term macro and competitive pressures could continue to pose challenges in 2024.
With this background, let’s delve into Q4 expectations.
ETSY – Q4 Consensus Estimates
Wall Street expects Etsy to deliver revenue of $827.79 million, up 2.5% year-over-year. The expected year-over-year increase reflects ongoing strength in the Etsy Ads and Payments businesses. However, pressure on gross merchandise sales (GMS) could restrict the top-line growth rate.
In terms of the bottom line, analysts expect Etsy’s earnings per share to stay flat at $0.77 in Q4. The benefits from cost-saving initiatives are likely to be offset by seasonally higher marketing spend.
Website Traffic Shows Growth
TipRanks’ website traffic screener shows that traffic increased for ETSY sequentially and year-over-year in Q4.
According to the tool, the number of visits to etsy.com and its subsidiary depop.com increased by 32.15% sequentially in Q4. Moreover, website traffic jumped 12.6% on a year-over-year basis.
Learn how Website Traffic can help you research your favorite stocks.
Is Etsy Stock Expected to Go Up?
Etsy stock is down about 5.5% year-to-date and has lost nearly 39% of its value in one year. However, analysts’ average price target of $82.58 implies a limited upside potential of 7.85% over the next 12 months.
Meanwhile, Wall Street is cautiously optimistic about Etsy stock. It has 10 Buy, eight Hold, and two Sell recommendations for a Moderate Buy consensus rating.
Insights from Options Trading Activity
It’s worth noting that options traders are pricing in a +/- 11.49% move in ETSY stock on earnings, greater than the previous quarter’s earnings-related move of 1.6%.
The anticipated move is determined by computing the at-the-money straddle of the options closest to the expiration after the earnings announcement.
Learn more about TipRanks’ Options tool here.
Bottom Line
Etsy will likely benefit from its large addressable market and strength in the Ads and Payments businesses. However, macro headwinds impacting consumer spending and increased competition will likely pose challenges.
