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High Degree Of Success Is Already Stitched Into Etsy's Price

High Degree Of Success Is Already Stitched Into Etsy's Price - Etsy Inc. NASDAQ:ETSY

Etsy Inc ETSY 5.27% reported robust 2Q results, with the revenue and adjusted EBITDA well ahead of the estimates and the consensus forecasts.

Goldman Sachs’ Heath P. Terry maintains a Neutral rating on the company, while raising the price target from $11 to $14.

Beat Quarter

Etsy reported higher than expected 2Q revenue of $85.3 million, representing 39 percent year-on-year growth.

GMS increased 22.6 percent year-on-year to $670 million, driven by a 20 percent increase in active buyers to 26.1 million, with mobile GMS rising to 47 percent of the total.

Related Link: Citi On Etsy: Looks Like Ashton Kutcher Bought More Than A $100 Ring

International GMS reached 30.7 percent of the total, with the international local markets gaining traction.

The adjusted EBITDA for the quarter came in at $14 million, well ahead of the estimate of $5.3 million, driven by conversion strength on both mobile and desktop.

Gross margin remained stable at 65.9 percent.

Success Reflected In Price

“While acceleration in GMS reflects progress in mobile conversion and marketing efforts, with ETSY trading at 22X 2017E EV/EBITDA, we believe a high degree of success is reflected in the price,” Terry mentioned.

The revenue and adjusted EBITDA estimates for 2016-2018 have been raised “to reflect traction in conversion initiatives, particularly internationally, and marketing leverage.”

At time of writing, Etsy was up 7.87 percent at $13.78.

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DateFirmActionFromTo
Aug 2016Goldman SachsMaintainsNeutral
Aug 2016CitigroupMaintainsBuy
Aug 2016Morgan StanleyMaintainsEqual-weight

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