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Etsy Shares Rise After Oppenheimer Upgrade on AI, Product Improvements
Shares of Etsy Inc. (NASDAQ:ETSY) gained 2.9% in premarket trading on Tuesday after Oppenheimer upgraded the stock to Outperform from a previous Perform rating. The firm also initiated a $90 price target, citing a positive outlook driven by artificial intelligence integration and platform enhancements.
Key Drivers for the Upgrade
Oppenheimer analyst Jason Helfstein detailed several factors behind the more optimistic rating. The firm's analysis points to significant benefits from AI-powered search, product improvements, and increased user engagement and conversion rates on the Etsy app.
A key data point supporting the upgrade comes from an analysis of SimilarWeb traffic, which suggested that non-app buyers in the third quarter were flat year-over-year. This marks an improvement from a 3% decline in the second quarter and indicates that Etsy is on track to achieve the high end of its gross merchandise sales (GMS) guidance, according to the note.
AdFinancial Outlook and Valuation
Based on these positive trends, Oppenheimer has increased its fiscal 2026 GMS estimate for Etsy by 1%, placing its forecast at the high end of Wall Street consensus. The firm now projects 5% GMS growth for the company in both fiscal 2027 and 2028.
The $90 price target is based on a valuation of 12 times the firm's 2027 EBITDA estimate. Oppenheimer noted this represents a 10% discount to competitor eBay (NASDAQ:EBAY), despite what it sees as similar growth expectations. The firm's research, which included a survey of 2,500 U.S. consumers, also suggested that Etsy's product improvements are creating a strong competitive moat and reducing its dependence on Google Search for traffic.
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