Etsy Spikes 11.5% On Upbeat 1Q Outlook After 4Q Profit Beat

Etsy stock gained 11.5% on Friday after the online marketplace for handcrafted goods reported stellar fourth-quarter results and forecasted a 1Q revenue outlook that topped the Street estimates.

Etsy’s (ETSY) adjusted earnings soared 332% to $1.08 per share from the year-ago period and outperformed the Street’s estimates of $0.59 per share. The company’s 4Q revenues jumped about 129% to $617.4 million and exceeded the consensus estimates of $516 million.

The company’s gross merchandise sales of $3.61 billion more than doubled from $1.66 billion in the year-ago quarter. Analysts were expecting gross merchandise sales of $3.08 billion.

The company’s CFO Rachel Glaser said, “Product enhancements and disciplined marketing investments worked together to increase buyer lifetime value, enabling us to increase spend in marketing while maintaining high return on investment.”

As for 1Q, Etsy expects to generate revenues in the range of $513-$536 million, much higher than analysts’ expectations of $383 million. (See Etsy stock analysis on TipRanks)

Following the impressive results, Roth Capital analyst Darren Aftahi raised the stock’s price target to $245 (11% upside potential) from $235 and maintained a Buy rating.

In a note to investors, the analyst said, “Although growth decelerates beyond 1Q, we believe it remains positive, while incremental investment (marketing/product) aids future growth plans, along with international traction.”

Overall, the Street has a bullish outlook on the stock, with a Strong Buy consensus rating based on 12 Buys, 1 Hold and 1 Sell. The average analyst price target of $232.93 implies upside potential of about 6% to current levels.

Furthermore, ETSY scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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