By Senad Karaahmetovic
Piper Sandler analysts upgraded Etsy (NASDAQ:ETSY) stock to Overweight from Neutral, sending it ~4% higher today.
The price target is raised to $140 per share, signaling an upside potential of about 30%. The analysts say the company's active buyer growth "can reaccelerate over the medium-term, powering continued share gains."
Moreover, Piper's 45th Gen Z survey points to momentum with Etsy mentioned as one of the favorite sites for this focus group.
"We think that core marketplace strengths of sustainability, intention, and personalization fit well into core values of Gen Z and millennials. The site has over 150mm SKUs and the significant focus on personalization (we believe carry 30%+ higher AOVs) are key differentiators vs other retailers and marketplaces. We also believe that ETSY has made significant strides in reactivating its 100mm lapsed buyers (24mm reactivated in 2022, highest ever), which should help drive stronger active buyer results over the coming quarters," the analysts wrote in a client note.
They also remind investors that the e-commerce business "has one of the strongest financial models" in the broker's coverage.
"While we acknowledge that macro conditions remain pressured and consumer spending may be tipping to the downside, we believe ETSY has growth company characteristics at a GARP valuation," they concluded.
Etsy shares are down nearly 10% year-to-date.