Fly News Breaks for December 5, 2019
Dec 5, 2019 | 06:48 EDT
Morgan Stanley analyst Lauren Cassel downgraded Etsy to Underweight from Equal Weight with a price target of $38, down from $52. The analyst's analysis indicates that headwinds from new state sales tax legislation and Etsy pulling back on its investment in Product Listing Ads could more than offset the benefits of free shipping. Further, a shorter holiday calendar and algorithm changes are two other Q4 risks, Cassel tells investors in a research note. While the analyst likes Etsy's business model and "competitive moat," she now anticipates slowing core gross merchandise sales growth to result in negative sales and EBITDA revisions. This could drive further multiple compression even through Etsy shares are already down 25% quarter-to-date, contends Cassel. Her 2020 EBITDA estimate is now 7% below consensus.
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