Citi downgrades Etsy to Neutral on near-term growth headwinds

Citi downgraded Etsy to Neutral from Buy with a price target of $67, down from $114. The analyst believes there is limited visibility into the company’s 2024 gross merchandise sales growth. The firm sees some headwinds to Etsy returning to stronger revenue growth, particularly near-term. Student loan payments add greater pressure on consumer discretionary spend, where Etsy squarely sits, and the company is also facing a greater promotional environment, greater competition and more limited take-rate upside. While over the longer term Etsy has an opportunity to accelerate and capture more of its total addressable market, in the near term there are too many headwinds that could pressure discretionary spend and the company’s opportunity to return to double-digit growth, contends Citi.