Evercore ISI issued a near-term tactical underperform call on Etsy ( NASDAQ: ETSY ) on the expectation that shares will drop further.
Analyst Shweta Khajuria and team pointed to negative consumer sentiment on the future of the U.S. economy after a survey indicated 50% respondents are somewhat-to-very pessimistic about the future direction of the U.S. economy. The survey also revealed negative purchase frequency trends for Etsy ( ETSY ) in particular.
The Evercore view is that consumer confidence is a leading indicator for future spending and the survey results indicate near-term caution is in order.
Evercore is still a long-term bull on ETSY and kept the retailer slotted with an Outperform rating as it looked beyond the 90-day danger period.
"We remain optimistic in Etsy’s ability to continue to gain market share and generate healthy topline growth while generating healthy EBITDA margins. We continue to view Etsy as a high-quality asset—healthy EBITDA margins, attractive FCF, unique value proposition, a large TAM, and a solid management team. When the macro environment normalizes, we could see accelerating topline growth and meaningful margin expansion."
Shares of Etsy ( ETSY ) fell 2.78% in early trading on Wednesday with the Target guidance warning a factor in the sector.
The Seeking Alpha Quant Rating on Etsy is Hold due to low marks for valuation, growth, and earnings revisions.
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Etsy trades lower after Evercore warns shares have not found a bottom yet