Argus pulled back on expectations for Etsy (NASDAQ:ETSY) on Monday after factoring in the online retailer’s Q1 earnings report and guidance update.
Analyst Chris Graja and team clipped the 2023 EPS estimate to $2.50 from $2.54 on Hold-rated Etsy (ETSY) and now see adjusted EBITDA of $673M vs. the prior forecast for $692M. Argus also lowered the 2024 EPS estimate to $3.04 from $3.30 and 2024 adjusted EBITDA estimate to $757M from $806M.
While earnings estimates have pulled back on Etsy (ETSY), the stock is also commanding a lower trading multiple that it did during the high-flying days of the pandemic.
“On a stock-specific level, Etsy’s P/E has declined from as much as 95-times forward four-quarter earnings in 2021 to about 30-times our 2023 estimate. Investors may have reevaluated their earnings estimates, their long-term growth rate forecasts, the length of their expected growth period, and the rate at which they are discounting projected cash flows.”
Graja also reminded that relatively small changes in any of the variables can have a significant effect on valuation, and the 10-year Treasury rate alone more than quadrupled from less than 1% in early 2021 to more than 4%.
Overall, the change in the macro environment has caused some investors to become more conservative in their assumptions for Etsy (ETSY) and increased the urgency for profitability to improve.
On Seeking Alpha, analyst Gary Alexander is also cautious on Etsy (ETSY). While Alexander thinks Etsy’s (ETSY) long-term appeal is rather limited because it has not exceeded the bounds of its niche, he also believes Etsy can make up lost ground from a valuation perspective in the short term, especially as adjusted EBITDA is holding up amid pressured top-line trends. Alexander recently pushed up his rating on Etsy (ETSY) to Sell.
Shares of Etsy (ETSY) are down 16.68% over the last six weeks and are 32.51% lower on a year-to-date basis. Etsy (ETSY) traded below its 100-day and 200-day moving averages. Short interest is at 8.54% of total float.