Canaccord raises Etsy stock price target on strong Q3 results

Canaccord has elevated its price target for Etsy Inc. (NASDAQ:ETSY) to $105 from $92, maintaining a Buy rating. The company's stock presently trades at $92.49 with a P/E ratio of 30.65, and analysts deem it undervalued with room for upside potential to Fair Value. This assessment is based on Etsy's robust third-quarter performance and growing growth composition fueled by internal initiatives.

Etsy's Marketplace gross merchandise sales saw a surge, marking the fourth consecutive quarter of acceleration and surpassing the high end of guidance. This growth was not confined to the app, with non-app gross merchandise sales contributing to the expansion. Internal initiatives played a more significant role this year in driving growth.

The company exhibits impressive gross profit margins of 71.4%, showcasing its pricing power within the marketplace model. Personalization initiatives contributed roughly 2 percentage points to annualized gross merchandise sales growth in the third quarter. Active buyers grew for the third consecutive quarter and turned positive year-over-year, although purchase frequency remains slightly lower year-over-year. New and reactivated buyers exhibit lower purchase frequency compared to established buyers.

Etsy's CFO, Lanny Baker, will depart on March 1, 2027, to explore other opportunities but will serve as an advisor until July 1. The company anticipates above-consensus fourth-quarter gross merchandise sales and has adjusted its fiscal 2026 gross merchandise sales growth outlook and adjusted EBITDA margin guidance to the high end of the prior range.

Etsy has also surpassed Wall Street expectations for Q3 2026, reporting adjusted earnings of $1.00 per share on revenue of $692.47 million, outpacing the predicted earnings of $0.76 per share and revenue of $668.05 million.

These developments suggest a positive trajectory for Etsy as it broadens its market presence. Investors may reevaluate their positions on the company in the wake of Etsy's strong earnings report. This account was generated using AI support and reviewed by an editor.