Shares of of the Brooklyn, N.Y. company were falling 9.1% to $167.80 in early trading Thursday.
After the market close on Wednesday, Etsy reported better-than-expected results for the first quarter, but offered cautionary guidance suggesting growth will slow.
KeyBanc analyst Edward Yruma, who reversed his long-held bullish view on the company last month, affirmed his downgrade to sector weight from overweight.
"While we like ETSY's long-term growth opportunities, we maintain that earnings upside is less likely near term, which underpins our Sector Weight rating," Yruma said in a research note.
Morgan Stanley analyst Lauren Schenk maintained her underweight rating on the stock.
"As we feared," she wrote, "the market was overly optimistic on 1) ETSY's ability to lap 2020's impressive growth, and 2) its ability to maintain a [double-digit] revenue multiple as growth [decelerates] over 100 [basis points]."
Schenk said she continues to "believe the stock is overvalued for its sustainable level of sales growth/profitability."
Jefferies analyst John Colantuoni said he saw a compelling buying opportunity in the pullback.
"We view weakness in ETSY's shares as a buying opportunity, given valuation stands at a discount to the growth-adjusted multiple, a track record of beating guidance and our outlook for accelerating growth," said Colantuoni, who has a buy rating on the stock.
Oppenheimer analyst Jason Helfstein cut his price target on Etsy's stock to $200 from $240, but maintained his outperform rating.
The analyst said he still sees the company "having a long runway of growth ahead, as they turn COVID-19 buyers into repeat customers and scale Intl. business."
"While investors were disappointed with guidance, we view the 84M buyer base as having the ability to scale to materially higher levels," Helfstein said. "We also see seller services as a natural hedge to re-opening headwinds."
Earlier this year, analysts rallied around Etsy after the company reported stronger-than-expected fourth-quarter earnings.