Etsy, Inc. (NASDAQ:ETSY) Just Reported And Analysts Have Been Lifting Their Price Targets

Shareholders might have noticed that Etsy, Inc. (NASDAQ:ETSY) filed its annual result this time last week. The early response was not positive, with shares down 4.3% to US$124 in the past week. The results were mixed overall, with revenues slightly ahead of analyst estimates at US$2.6b. Statutory losses by contrast were 5.9% larger than predictions at US$5.48 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Etsy

Taking into account the latest results, the most recent consensus for Etsy from 26 analysts is for revenues of US$2.77b in 2023 which, if met, would be a decent 8.1% increase on its sales over the past 12 months. Earnings are expected to improve, with Etsy forecast to report a statutory profit of US$2.61 per share. Before this earnings report, the analysts had been forecasting revenues of US$2.73b and earnings per share (EPS) of US$2.76 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 7.4% to US$142, suggesting the revised estimates are not indicative of a weaker long-term future for the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Etsy at US$186 per share, while the most bearish prices it at US$47.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Etsy's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 8.1% growth on an annualised basis. This is compared to a historical growth rate of 37% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% annually. Factoring in the forecast slowdown in growth, it seems obvious that Etsy is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Etsy analysts - going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with Etsy (including 1 which is concerning) .

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.