Etsy Soars Most in a Year After Citi Initiates With Buy Ratingby
Etsy Inc. rose the most in a year after Citigroup Inc. analyst Mark Kelley recommended the stock with a target price of $14 a share, saying the e-commerce company has developed a strong brand for its quirky products. Etsy, which has struggled to compete with industry giants like Amazon.com Inc., will report earnings after market Tuesday.
Kelley said Etsy’s quirky, hand-crafted items put the company in a separate category with “little evidence to suggest” those products are a priority for larger online marketplaces such as Amazon and EBay Inc.
“We have confidence in the stickiness of the seller-base despite the fact roughly half of them sell via other channels,” Kelley wrote Monday in a note initiating coverage of the company. “We also believe Etsy has built a fairly well-established brand when it comes to creating a marketplace where people can find truly unique items.”
Etsy rose 17 percent to $11.79 at 2:04 p.m. in New York after earlier reaching $12 for the company’s biggest intraday climb since July 2015. The Brooklyn, New York-based company gained 22 percent this year through Friday’s close.
In the first quarter, Etsy posted its first quarterly profit since becoming a public company in April 2015, but the stock soon fell as investors began to question its long-term strategy. Etsy took another hit last month when customers encountered glitches with its third-party payment system.
James Cakmak, an analyst with Monness Crespi Hardt & Co., expressed optimism about the company in a note July 28, while maintaining his rating equivalent of a hold. Cakmak said integration with PayPal Holdings Inc. and increased overseas efforts will contribute to its growth.
“We are increasingly becoming constructive on Etsy’s quality of execution,” Cakmak said.