Etsy Inc (NASDAQ:ETSY, ETR:3E2), the e-commerce company, is unlikely to offer much upside for its shares in 2024 when it reveals full-year guidance on February 21, analysts believe.
Fourth-quarter results are expected to keep in line with consensus, but analysts at Wedbush are bracing for a “mixed” outlook for the 2024 financial year.
Continued near-term macro and competitive pressures are predicted to offset any potential efficiencies and capital return initiatives.
Data has indicated that Etsy’s unique users and engaged website traffic slowed during the fourth quarter and into January, leaving Wedbush cautious that said weakness “could be viewed more harshly by investors”.
Etsy is also working with activist investor Elliot Management, having appointed the fund’s Marc Steinberg to the board of directors after it amassed a 13% stake in the company.
Wedbush believes Elliot will drive efficiencies and help boost its profits, potentially through the sale of Depop and Reverb, which combined could be worth between US$1 billion and US$1.2 billion.
“If ETSY shares can hold their EBITDA multiple, this could boost share prices by 14-16% alone, although shares have already increased 12% since the announcement of Mr Steinberg’s appointment to the Board,” the LA bank added.
Wedbush keep a ‘neutral’ rating on Etsy and target a US$85 share price, around US$5 higher than its trading price on Wednesday.