Etsy stock rose by over 3% on Tuesday as analysts started turning bullish on the company. It rose to $76.45, up by nearly 10% from its lowest level this month. But it also remains in a technical correction after falling by 13% from its highest point this year.
Analysts are turning bullish on Etsy stock
Some analysts tracking Etsy have turned bullish on the company, noting that it will be a big beneficiary of the artificial intelligence boom.
In a note released today, Ananya Chetia, an Oppenheimer analyst, said that she expects the stock to jump to $90, suggesting a 21% upside from the current level. She also upgraded the rating from perform to outperform, noting that it will benefit from AI use in virtual shopping.
Other analysts are bullish on the company. Nikhil Devnani, a Bernstein analyst, upgraded the company from hold to strong buy, while Taylor Conrad, an Argus analyst, hiked the target from $67 to $89. Similarly, analysts from companies like Bank of America, Morgan Stanley, Loop Capital, and Rosenblatt have a bullish outlook for the company.
Etsy’s business is doing fairly well
Etsy, an online marketplace for handcrafted items, has gone through a rough patch in the past few years as the momentum it experienced during the pandemic. Its revenue growth has slowed, and its relationship with its creators has soured amid the price increases.
The most recent results showed that it had 87 million active buyers in the second quarter, largely unchanged from the same period last year. Its new buyers were 5 million, up by 4.4% from the same period last year, while the reactivated buyers rose to 7.1 million.
At the same time, the number of active sellers rose to 5.7 million, up slightly from the same quarter last year.
With its revenue growth slowing, the management is working to boost its profits. It recently announced that it was laying of 220 employees, equivalent to 12% of its total workforce. This restructuring plan will cost it $35 million.
Analysts expect that its revenue growth will remain under pressure, especially after the $1.6 billion sale of Depo and Reverb. The average estimate is that its third-quarter revenue will drop by 1.45% to $668 million, with the annual figure falling by 1.16% to $2.85 billion.
Etsy stock technical analysis
Etsy stock chart | Source: TradingView
The daily chart shows that the Etsy share price formed a triple-top pattern at $87 and a neckline at $77.7. A triple-top is one of the most bearish patterns in technical analysis.
It has now slipped below the neckline at $77.77, its neckline and also the 23.6% Fibonacci Retracement level. It is now attempting to bounce back after moving to the 38.2% Fibonacci Retracement level.
The stock remains below the 50-day moving average and the resistance at $77.77. As such, it is attempting to form a break-and-retest pattern, a common continuation sign. The bearish outlook will remain intact as long as it is below $77.77.
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