Wedbush's Confidence In Etsy Increases After Meeting With CFO

After hosting a meeting with Etsy Inc ETSY executives, Wedbush walked away with positive takeaways. 

The Analyst

Ygal Arounian maintained a Neutral rating on Etsy with a $60 price target.

The Thesis

Following a meeting with CFO Rachel Glaser, Arounian said Etsy management feels it is in early stages of launching several initiatives that will accelerate gross merchandise.

These would allow the company to capture a greater share of its total addressable market over the next three to five years, the analyst said in a Tuesday note. (See his track record here.) 

Product initiatives, marketing and CRM improvements and better shipping are some of the catalysts that will push Etsy's growth forward, he said. 

“A better product also improves the likelihood that future pricing increasing can be digested by buyers." 

Pricing and take rate increases have been the No. 1 topic for investors, Arounian said. 

Any future price increase will be tied to Etsy aiming to offer more services or improvements to sellers, in the analyst's view. 

“While not ruling out any future price increases, management did note not to ever expect it on a scheduled basis." 

Etsy is aiming to create a more unified shipping policy, according to Wedbush.

The company’s shipping offerings are still limited to discounted printing labels, but Arounian said speed, accuracy and return policies are also important to improving the shipping experience.

“And while there has been some testing on the former three, most of the focus to date has been on cost (better rates for sellers, free delivery for buyers)."

Etsy's Glaser said sellers of expensive items are accustomed to shipping challenges — but Etsy can offer "white glove, first and last mile delivery" functionality for many of its sellers,” the analyst said. 

Price Action

Etsy shares were up 2.53 percent at $66.92 at the time of publication Tuesday. 

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Photo courtesy of Etsy.