Etsy Rises After Beating Estimates and Providing Forecastsby
Etsy Inc., the online marketplace for unique and small-batch goods, jumped after reporting revenue that beat analysts’ average estimate.
Fourth-quarter sales -- boosted by a strong holiday season -- increased 35 percent to $87.9 million, beating the average analyst estimate of $86.7 million, according to data compiled by Bloomberg. Etsy also provided annual forecasts through 2018, reversing Chief Executive Officer Chad Dickerson’s original decision to not do so.
“The stock may see a relief rally from better-guided GMs,” or gross margins, Darren Aftahi, an analyst with Roth Capital Partners, wrote in a note. He maintained a sell stock rating, though he bumped up his price target estimate to $6.
Etsy’s shares rose 6.9 percent to $7.90 at the close Wednesday in New York. The stock has declined 51 percent in the past 12 months.
The company forecast that revenue will increase at the high end of 20 to 25 percent this year, while gross margins should be 64 to 65 percent.
Etsy, known for featuring such items as custom pet portraits and engraved shot glasses, has struggled to gain investor confidence as growth in both active buyers and sellers slowed, impacting revenue gains from the marketplace. The company over the last few years has been building out its seller services -- such as direct checkout and promoted listings -- as a new revenue stream. Sales from that segment overtook marketplace revenues for the first time this year.
The company expects a three-year compound annual growth rate for revenue of 20 percent to 25 percent and to have a gross margin in the mid-60s percent range by 2018, it said.