Etsy Shatters Earnings Forecasts, But Sees Growth Slowing

Second-quarter gross merchandise sales forecast to decline from first-quarter's $3.14 billion.
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Etsy  (ETSY) - Get Report reported better-than-expected results for the first quarter, but offered cautionary guidance suggesting growth will slow.

The company reported profit of $143.77 million, or $1 per share, in the first quarter, up from $12.52 million, or 10 cents, in the year-earlier, pandemic-affected quarter. The FactSet analyst consensus called for a loss of 34 cents in the latest quarter.

Revenue registered $550.65 million, up a whopping 141% from $228.06 million last year. the analyst consensus called for $332 million in the latest quarter.

The online artisanal goods retailer said gross merchandise sales are expected to be $2.8 billion to $3.1 billion in the second quarter, compared with $3.14 billion in the first quarter.

Etsy shares recently stood at $171.99, down 6.82% in after-hours trading. It had jumped 36% in the last six months through Wednesday’s close, as the pandemic sparked plenty of online shopping.

Last month, KeyBanc analyst Edward Yruma downgraded Etsy to sector weight from overweight, citing valuation and earnings concerns.

"We believe Etsy remains one of the best long-term growth opportunities in our coverage. However, we move to sector weight given what we view as a fair valuation and lower likelihood of near-term beats," he said.

Yruma noted that Etsy has outperformed the broader market by a wide margin since KeyBanc first set an outperform rating on the company in October 2017. Now the stock's valuation looks "fair" and the current consensus analyst expectations look "reasonable," he said.

On March 19, TheStreet.com founder Jim Cramer discussed Etsy with TheStreet.com’s Katherine Ross.

In February, analysts offered glowing commentary after the company’s fourth-quarter earnings report. Jefferies raised its price target on the Brooklyn, N.Y., company to $260 from $245.

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